Limitations of Rational Consumer Choice
Critique of the Maximizing Behaviour of Consumers and Producers
AO3·HL
Syllabus requirement
Critical evaluation through behavioral economics concepts: biases, imperfect information, and psychological constraints.
Assessment objectives
AO3 Synthesis and Evaluation
Higher LevelThis topic is assessed at HL.
Summary
This topic examines why the standard assumption that consumers always make fully informed, rational choices is unrealistic. It summarises behavioural economics evidence — biases, bounded rationality, bounded self-control, bounded selfishness and imperfect information — that explain predictable departures from utility-maximising behaviour and why those departures matter for policy and market outcomes.