Economics, 3rd Edition

BEHAVIOURAL APPROACHES TO CONSUMER BEHAVIOUR

Doubts about the validity of the SEM have arisen because of a number of reasons but mostly because 

of doubts about whether consumers really do behave rationally, which is one of the fundamental bases 

of the SEM. Many of the things we do in life and the decisions we make cannot be explained as those of 

rational beings. (Rational beings are sometimes referred to by economists as homoeconomicus.)

Rather than being rational, humans can be forgetful, impulsive, confused, emotional and short-sighted. 

Economists have suggested that humans are only ‘near rational’ or that they exhibit ‘bounded rationality’.