2.4.1 (HL)—Rational consumer choice

The rational-choice benchmark assumes consumers are rational, maximize utility and possess perfect information. Behavioural economics asks how real decisions depart systematically from those assumptions.

Rules of thumb simplify choices; anchoring makes an initial value influential; framing changes responses when equivalent options are presented differently; availability bias overweights vivid or recent examples. Imperfect information further weakens informed maximization.

Bounded rationality limits processing, bounded self-control creates conflict between current and long-term preferences, and bounded selfishness allows fairness or concern for others. Identify the specific limit and explain how it changes the predicted choice.

A shopper may treat a crossed-out 'original price' as an anchor and judge the current price as a bargain without comparing alternatives, contradicting perfect-information utility maximization.

Indifference curves and budget-line optimization are not required in this syllabus Objective. A bias is a systematic tendency, not proof that every consumer always makes the same error.