This paper analyzes consumer choice and its impact on microeconomic trends. It discusses how the theory of consumer choice shapes demand curves and how wages and interest rates affect consumption. It also reviews asymmetric information and how it influences economic transactions. The paper examines the Condorcet voting paradox and Arrow's impossibility theorem. Finally, it discusses irrational behavior in economics and how it can impact demand curves.
In economics, demand is the utility for a goods or service of an economic agent, relative to his/her income.[citation needed] (Note: This distinguishes "demand" from "quantity demanded", where demand is a listing or graphing of quantity demanded at each possible price. In contrast to demand, quantity demanded is the exact quantity demanded at a certain price. Changing the actual price will change the quantity demanded, but it will not change the demand, because demand is a listing of quantities that would be bought at various prices, not just the actual price.)
The law of demand is a microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. The law of demand says that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire that good or service increases, and they must make more tradeoffs to acquire the more expensive product.
MBA: Managerial Economics - Supply and Demand Curve RelationshipKishan Kumar
This MBA Managerial Economics assignment explains in-depth on the Supply & Demand methodology. With clear illustrations of data, graphs & formula readers are able to grab the concept of the Supply & Demand curve with the effect of consumers behavior.
The Market Of Supply and Demand - EconomicsFaHaD .H. NooR
demand and supply
demand and supply curve
demand and supply graph
market force
market forces economics
market research
marketing force
supply and demand curve
supply and demand graph
supply chain management pdf
supply demand
supply demand curve
supply demand SlideShare
Hello Students,
My Slide will help you to understand all about demand analysis and its impact on economic.in what situations demand increases and decreases.contraction and expansion of demand.
In economics, demand is the utility for a goods or service of an economic agent, relative to his/her income.[citation needed] (Note: This distinguishes "demand" from "quantity demanded", where demand is a listing or graphing of quantity demanded at each possible price. In contrast to demand, quantity demanded is the exact quantity demanded at a certain price. Changing the actual price will change the quantity demanded, but it will not change the demand, because demand is a listing of quantities that would be bought at various prices, not just the actual price.)
The law of demand is a microeconomic law that states, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa. The law of demand says that the higher the price, the lower the quantity demanded, because consumers’ opportunity cost to acquire that good or service increases, and they must make more tradeoffs to acquire the more expensive product.
MBA: Managerial Economics - Supply and Demand Curve RelationshipKishan Kumar
This MBA Managerial Economics assignment explains in-depth on the Supply & Demand methodology. With clear illustrations of data, graphs & formula readers are able to grab the concept of the Supply & Demand curve with the effect of consumers behavior.
The Market Of Supply and Demand - EconomicsFaHaD .H. NooR
demand and supply
demand and supply curve
demand and supply graph
market force
market forces economics
market research
marketing force
supply and demand curve
supply and demand graph
supply chain management pdf
supply demand
supply demand curve
supply demand SlideShare
Hello Students,
My Slide will help you to understand all about demand analysis and its impact on economic.in what situations demand increases and decreases.contraction and expansion of demand.
presentation on graffiti by the University of Alabama. From this original source. No copyright infringement intended. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CCYQFjAA&url=http%3A%2F%2Fwww.uofaweb.ualberta.ca%2Fcrsc%2Fpdfs%2FGraffiti-Public_version%28FINAL%29-Compressed_images.ppt&ei=drxGT8DkBIXrtgeApKSdDg&usg=AFQjCNFFFVQYhHc7o0WA3nuSFVY4LPj0Bg
Social Media Marketing PowerPoint PresentationAndrew Schwartz
100+ PowerPoint presentation content slides. Marketing is a key component to the success and revenue flow of any business. Social media websites and resources have yielded outrageous success in the past decade, opening enormous markets of potential customers to businesses around the world.
This is the presentation I made on JavaDay Kiev 2015 regarding the architecture of Apache Spark. It covers the memory model, the shuffle implementations, data frames and some other high-level staff and can be used as an introduction to Apache Spark
You are on the right track. Here are a few sugg.docxtarifarmarie
You are on the right track. Here are a few suggestions:
1. I would work on making each slide more visually appealing. Here is
a before/after example:
Before:
After (kept title only in the orange section, numbered the four step,
centered the text):
2. You can tell me more in each of your notes section, you are a little
brief.
3. Please make sure you tell me where you are getting your information
on each slide.
Behavioral Public Choice:
The Behavioral Paradox of
Government Policy
W. Kip Viscusf & Ted Gayer”
I. Overview
W hat are the economic justifications for governm ent inter
vention in the economy? In a m arket economy, prices coordi
nate the activities of buyers and sellers and convey inform ation
about the strength of consum er dem and for a good and the
costs of supplying it. Because trade is voluntary, buyers and
sellers only m ake exchanges w hen both parties benefit. Under
ideal m arket conditions, this process leads to an efficient alloca
tion of goods w ithout governm ent intervention.
However, economics has long recognized instances in which
markets can fail to lead to an efficient outcome. The long-standing
view is that either market power or the nonexistence of markets
causes market failures. Market power is present w hen some indi
viduals or firms are price makers (for example, monopolists) ra
ther than participants in a perfectly competitive environment.
Such situations typically lead to the production of a less than effi
cient quantity of goods. The problem of market power is the pur
view of industrial organization economics and antitrust policy. * 1
The nonexistence of markets, or the failure of a robust market to
arise, can occur for a num ber of reasons, such as asymmetric in
formation (when one party in a transaction has information that is
not available to another) and public goods (when a good is non
rival and nonexcludable in consumption and thus likely to be un-
* University Distinguished Professor of Law, Economics, and Management,
Vanderbilt Law School, 131 21st Ave. South, Nashville, TN 37203. [email protected]
vanderbilt.edu. We are grateful to the Mercatus Center for their support.
**Vice President and Director, Economic Studies, Brookings Institution, 1775
Massachusetts Ave. NW, Washington, DC 20036. [email protected]
1. H arvey S. Rosen & Ted Gayer, Public Fin a n c e 46-48 (10th ed. 2013).
mailto:[email protected]
974 Harvard Journal of Law & Public Policy [Vol. 38
dersupplied by the market). Another cause for the nonexistence of
markets is externalities, which occur when transactions impose
costs or benefits on a third party that are not considered in the
market exchange. A classic example is when a factory produces
and sells a good to a consumer to their m utual advantage, but the
pollution generated by the production of the good has a negative
impact on the health of nearby residents. A market for the clean
air in the affected.
Behavioral Public Choice The Behavioral Paradox of Gove.docxtaitcandie
Behavioral Public Choice:
The Behavioral Paradox of
Government Policy
W. Kip Viscusf & Ted Gayer”
I. Overview
W hat are the economic justifications for governm ent inter
vention in the economy? In a m arket economy, prices coordi
nate the activities of buyers and sellers and convey inform ation
about the strength of consum er dem and for a good and the
costs of supplying it. Because trade is voluntary, buyers and
sellers only m ake exchanges w hen both parties benefit. Under
ideal m arket conditions, this process leads to an efficient alloca
tion of goods w ithout governm ent intervention.
However, economics has long recognized instances in which
markets can fail to lead to an efficient outcome. The long-standing
view is that either market power or the nonexistence of markets
causes market failures. Market power is present w hen some indi
viduals or firms are price makers (for example, monopolists) ra
ther than participants in a perfectly competitive environment.
Such situations typically lead to the production of a less than effi
cient quantity of goods. The problem of market power is the pur
view of industrial organization economics and antitrust policy. * 1
The nonexistence of markets, or the failure of a robust market to
arise, can occur for a num ber of reasons, such as asymmetric in
formation (when one party in a transaction has information that is
not available to another) and public goods (when a good is non
rival and nonexcludable in consumption and thus likely to be un-
* University Distinguished Professor of Law, Economics, and Management,
Vanderbilt Law School, 131 21st Ave. South, Nashville, TN 37203. [email protected]
vanderbilt.edu. We are grateful to the Mercatus Center for their support.
**Vice President and Director, Economic Studies, Brookings Institution, 1775
Massachusetts Ave. NW, Washington, DC 20036. [email protected]
1. H arvey S. Rosen & Ted Gayer, Public Fin a n c e 46-48 (10th ed. 2013).
mailto:[email protected]
974 Harvard Journal of Law & Public Policy [Vol. 38
dersupplied by the market). Another cause for the nonexistence of
markets is externalities, which occur when transactions impose
costs or benefits on a third party that are not considered in the
market exchange. A classic example is when a factory produces
and sells a good to a consumer to their m utual advantage, but the
pollution generated by the production of the good has a negative
impact on the health of nearby residents. A market for the clean
air in the affected area would not emerge if high transaction costs
of organizing the pollution victims prevented the parties from
negotiating.2 The market system will fail to internalize the health
costs imposed by the factory's operations and lead to inefficiently
high production and health consequences.
For about a century, economists have argued that policymakers
should rely, when possible, on market-based principles in design
ing regulations to address thes.
The purpose of this exercise is to use economic theory to analyze .docxhelen23456789
The purpose of this exercise is to use economic theory to analyze some collective decision making outcome or public policy.
You can examine either the effects of this policy on the allocation of society’s resources, or you can study how or why the policy came to be adopted in the first place.
The collective decision making entity that is the focus of your analysis can be an electorate, a legislature (federal, state, local), a bureaucracy or executive agency, a court, an “informal” government (mafia, gang, warlord), a club, a committee or board, or even a supranational organization (UN, IMF, World Bank, WTO).
Alternatively, instead of studying a particular policy or decision, you can investigate the set of rules (constitution) or institutions (formal or informal) which regulate the decision making process.
In this case, you can explain either the origin of the rules or how the rules affect the ultimate decisions made.
The paper must be an original piece of work.
Plagiarism (e.g., copying-and-pasting from a web site without acknowledgement of the source) will result in a grade of zero being assigned to the paper.
The paper must be 8.5 to 10 pages in length, typed and double-spaced in 12-point font with normal one-inch margins.
All sources used in the paper must be listed alphabetically by author in a “List of References” appearing at the end of the paper.
Do not
list items that are
not
cited in the paper.
Use a consistent style of footnotes, endnotes or textual references to cite sources.
Below I have suggested some possible topics for your paper, together with some information sources on each.
These topics are merely for illustrative purpose.
While you are certainly free to pick one of these topics if you wish (and to use some of the literature listed), it is my hope that many of the students in the class will come up with topics of their own based on their own interests.
If you do pick your own topic, it is advisable to mention it to me in order to ensure that it is appropriate.
But you should not limit yourself: almost any conceivable issue that interests you can probably be developed into a suitable paper.
You must use
at least three
sources of information in your paper.
These sources must be
scholarly contributions
similar to those listed below.
A scholarly contribution is an article in a professional academic journal (e.g.,
American Economic Review
,
Public Choice
,
Cato Journal
), a scholarly monograph (a book that is not a textbook), a chapter in an edited volume of collected works, or an unpublished working paper (these are often distributed as part of a working paper series, such as that of the National Bureau of Economic Research,
www.nber.org/papers/
)
.
These articles and books need not necessarily be written by economists: they could be from closely related fields such as law, political science or other social sciences.
You can search for academic literature on your topic by doing subj.
Comparative Essay - 10 Examples, Format, Pdf Examples. Writing A Comparative Essay : Sample Comparative Essay Format. Descriptive essay: Write a comparison essay. Comparison essays examples in 2021 Essay examples, Essay, Writing. Descriptive essay: Comparison research paper example. Writing A Comparative Essay How to write a perfect comparative essay .... Comparing and Contrasting - The Writing Center - How to Write a Compare .... 2 Comparison Essay Examples That Make Cool Comparisons. Writing A Comparative Essay Step 1 - Choose Your Subject. How to write a comparison essay Essay writing skills, Essay writing .... Comparison essay. Comparison Essay Assignment. Comparison Essay.docx Essays Thesis. What is a comparison essay. Comparison essay essay writing help .... Comparative essay example with perfection All you need to know. What is
. (TCO 8) Describe the two key considerations in terms of the ment.docxmercysuttle
. (TCO 8) Describe the two key considerations in terms of the mental models that members have about their actual work. Give examples of both.
(TCO 8) What three indices are used to evaluate the creativity of a team's ideas?
(TCO 7) What are the three specific types of ties in which people in teams bond?
. (TCO 1) What factors suggest that building and maintaining effective teams will be extremely important in the future? Explain your answer, and give examples of specific organizations that illustrate your points. (Points : 30)
(TCO 3) What are the advantages and disadvantages of clique and boundary-spanning networks? Provide examples to support your answer.
(TCO 6) Describe the two psychological explanations for group polarization. Provide concrete examples for support.
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PATRICK DE PELSMACKER, LIESBETH DRIESEN,
AND GLENN RAYP
Do Consumers Care about Ethics? Willingness to
Pay for Fair-Trade Coffee
Consumers’ buying behavior is not consistent with their positive
attitude toward ethical products. In a survey of 808 Belgian respond-
ents, the actual willingness to pay for fair-trade coffee was measured.
It was found that the average price premium that the consumers were
willing to pay for a fair-trade label was 10%. Ten percent of the sample
was prepared to pay the current price premium of 27% in Belgium.
Fair-trade lovers (11%) were more idealistic, aged between 31 and
44 years and less ‘‘conventional.’’ Fair-trade likers (40%) were more
idealistic but sociodemographically not significantly different from
the average consumer.
The purpose of this study was to investigate to what extent consumers
were willing to pay for the fair-trade attribute when buying coffee, and
how consumers differed in terms of their willingness to pay. First, we will
describe fair trade within the context of ethical consumer behavior. Sub-
sequently, the research questions used in our study will be examined.
Consumers can express their concern about the ethical behavior of com-
panies by means of ethical buying and consumer behavior. In general, the
ethical consumer feels responsible toward society and expresses these feel-
ings by means of his or her purchasing behavior. Doane (2001) defined
ethical consumption as the purchase of a product that concerns a certain
ethical issue (human rights, labor conditions, animal well-being, environ-
ment, etc.) and is chosen freely by an individual consumer. There are
several dimensions of ethical consumer behavior. Some forms of ethical
consumption benefit the natural environment (e.g., environmentally friendly
products, legally logged wood, animal well-being), while others benefit peo-
ple (e.g., products free from child labor, fair-trade products). Cutting across
this distinction, ethical consumption may benefit people or the environment
close to ...
Diversity on Wall Street: Where are the women decision makers?Stacey Troup
a case study on the failure of Wall Street to vastly recognize women as viable solutions to portfolio management and other high-profile positions that are predominantly held by men.
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how can I sell pi coins after successfully completing KYC
Microeconomics paper (undergrad)
1. 1
Theory of Consumer Choice and Frontiers of Microeconomics
Stacey Troup
Principles of Microeconomics/ECO-365
August 15, 2016
Ashok Padhi
2. 2
Theory of Consumer Choice and Frontiers of Microeconomics
This Week 5 final paper will serve as an analysis of consumer choice and its effect on
microeconomic trends. Included in this analysis will be an overview of the impact the Theory of
Consumer Choice has on demand curves, higher wages and interest rates. Additionally, a review
of the role asymmetric information has on many economic transactions will be done along with a
review of the Condorcet Voting Paradox and Arrow’s Impossibility Theorem. Finally, a review
of irrational behavior in economics will be done, rounding out the subject matter for this final
exam paper.
Theory of Consumer Choice
As we review the demand curves and the impact that the theory of consumer choice has
on these curves, it is important to remember that demand curves for a good reflect a consumer's
willingness to pay for it and that these curves arise naturally from the theory of consumer choice.
As prices for individual items rise, the demand curve slopes downward (or fails) reflecting a
reduced demand for the item. Alternatively, as prices for items decrease, the demand curve
increases which drives the consumption of the item up as well as the demand curve for this item
to be driven up. This reduction or increase in consumption is the foundation of the Theory of
Consumer Choice and its principles (Mankiw, 2015). Sometimes a rare instance causes a
consumer to purchase less even though the relative price of the item has fallen. This “bizarre
property” of consumption is referred to as Giffen goods (Mueller, 2004).
Within higher wages; as people earn more money, they are driven to consume more
because their budget constraints become steeper which directly correlates to the relative price
(Mankiw, 2015). For every increase in a person’s wage, a higher consumption for every hour of
leisure is earned. Additionally, disposable incomes generate a higher return to the local
3. 3
economies, driving up demand curves. As these wages are increased, the propensity to spend
more on goods or to purchase more “luxury” goods increases, thus driving up the demand curve
and creating greater equilibrium (Mueller, 2004).
Higher interest rates cause the budget constraint to shift outward and become steeper
(Mankiw, 2015). As interest rates climb, stores may be charged more to purchase the goods they
supply to consumers and those increased costs are passed on to the consumer through retail
pricing. Additionally, consumers may be charged more for their living expenses and other
consumptions as interest rates rise. As these increase in interest rates occur, budget constraints
and consumer spending decrease due to the lack of disposable income (Mankiw, 2015).
The Role Asymmetric Information has on Economic Transactions
Asymmetric information, originally developed in the 1970’s and 1980’s as a way to
explain equilibrium issues and common phenomenon (such as the Giffen goods theory) that
general economics failed to explain. Simply put, asymmetric information sets out to identify the
information imbalances between buyers and sellers in a certain market (Frieden & Hawkins,
2009) s.
Three economists were awarded the Nobel Prize in Economics for their influential work
on this subject in 2001. George Akerlof, Michael Spence, and Joseph Stiglitz each provided
their individual areas of expertise to the Asymmetric Information Theory (Ross, 2015).
Akerlof first provided information relating to the varying knowledge base differences
between car buyers and sellers and argued a theory that encouraged the idea that sellers have the
advantage of selling goods containing “less than average market quality” properties (Ross,
2015). Spence added that the value of employees is unknown to employers and referred to them
as “an uncertain investment”, sighting the uncertainty in capabilities when hiring. Adding to this
4. 4
theory he identified asymmetries between employers and employees whereby low-paying jobs
create a trap through “persistent equilibrium” which discourages increasing wages in certain
markets (Ross, 2015).
Stiglitz, however, reached the most acclaim discussing negative externalities and their
impact on the pricing of certain items in the market. The example given was a high-risk
individual and the high premiums for health insurance which are prohibitive to the buyer because
they restrict purchase due to their price (Ross, 2015).
The Condorcet (Voting) Paradox and Arrow’s Impossibility Theorem
Condorcet’s Paradox often referred to as a voting paradox, relates to preferences between
sets of choices A>B>C, and the variables and outcomes of that set of options. When transitivity
exists, you would put A vs B, B vs C and C vs A and expect A to be the overall winner.
However, when transitivity does not exist, we experience a Condorcet Paradox (Olken, 2012).
Condorcet’s Paradox contains both winners and cycles. Condorcet winner is considered
an alternative that gains the majority vote when it is paired against the other alternatives (Olken,
2012). Condorcet cycle occurs when there are transitivity violations in the social preference
ordering (Olken, 2012).
Kenneth Arrow’s ‘impossible” theorem assumes that buyers have “rational preferences
over alternatives” (Stanford University, 2014). Important to note is that Arrow’s Theorem
include the uses of unanimity, transitivity, independence of irrelevant alternatives and no
dictators (Mankiw, 2015) Defined as a “mathematical theory showing that under certain
assumed conditions there is no scheme for aggregating individual preferences into a value set of
social preferences” (Vandeem, 2014).
5. 5
Irrational Behavior in Economics
While traditional economic theory assumes that demand curves are “negatively inclined”
(Becker, 1962) based on rational behavior, causing them to be consistent and transitive, irrational
behaviors do exist.
When irrational behaviors exist, demand curves are negatively inclined. In a more recent
example of irrational behavior in economics exists the Brexit argument. According to a
University of Chicago professor who specializes in Behavioral Economics, the protestors seeking
to leave the EU are not “acting or thinking the way traditional economics would expect them to”.
The reasoning for this irrational behavior lies in the lack of analytical review of all information
and the associated costs correlating to the overall happiness of the consumer (Pfeiffer, 2016).
Economics say that the Brexit decision is a prime example of irrational behavior for this reason.
Conclusion
While several factors affect the supply and demand curves, irrational behaviors have their
own, often negative, effects on the demand curves. Informed buyers who make analytically
based decisions on their consumption based on best practices of financial health keep the demand
curve in equilibrium and represent rational behavior. Consumer choice needs to be driven by
these best practices rather than brand loyalty if the consumer is to enjoy long-term financial
health.
6. 6
Works Cited
Becker, G. S. (1962). Irrational Behavior and Economic Theory. Journal of Political Economy,
1-13. Retrieved from
https://www.jstor.org/stable/1827018?seq=1#page_scan_tab_contents
Frieden, B. R., & Hawkins, R. J. (2009). Asymmetric Information and Economics. Physica A:
Statistical Mechanics and its Applications. Retrieved from
http://www.sciencedirect.com.contentproxy.phoenix.edu/science/article/pii/S0378437109
00781X
Mankiw, N. (2015). Principles of Microeconomics. Retrieved from
https://phoenix.vitalsource.com/#/books/9781305892811/cfi/6/10!/4/2/2@0:0.
Mueller, O. L. (2004). Autodetermination in Microeconomics: A Methodological Case Study on
the Theory of Demand. Analyse Und Kritik, 322-325. Retrieved from
http://search.proquest.com.contentproxy.phoenix.edu/docview/208535279/fulltextPDF/F
D95C91427BA4CAFPQ/1?accountid=458
Olken, B. (2012). Sometimes It Gets Complicated. Retrieved from MIT:
http://ocw.mit.edu/courses/economics/14-75-political-economy-and-economic-
development-fall-2012/lecture-notes/MIT14_75F12_Lec12.pdf
Pfeiffer, C. (2016, 06 21). Thaler: Brexit Shows Irrational Behavior. Retrieved from Business
Insider: http://www.businessinsider.com/thaler-brexit-shows-irrational-behavior-2016-6
Ross, S. (2015, 04 25). What is the theory of asymmetric information in economics? Retrieved
from Investopedia: http://www.investopedia.com/ask/answers/042415/what-theory-
asymmetric-information-economics.asp
7. 7
Stanford University. (2014, 10 13). Stanford Encyclopedia of Philosophy. Retrieved from
Arrow's Theorem: http://plato.stanford.edu/entries/arrows-theorem/
Vandeem, A. (2014). On the empirical relevance of Condorcet's paradox. Public Choice, 2-4.
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