Abstract
Since the founding work of Simon (1955) and Kahneman and Tversky (1974, 1986), it is recognized that agents, namely consumers, are endowed with a bounded rationality. Consumer biases cover a wide range of behaviors, such as quality misperception, status quo bias, projection bias, inertia, and can have various consequences on the market equilibrium. The aftermaths of consumer misperception depend on the type of bias one considers, as well as on the market structure. This entry presents a typology of consumer biases and mentions possible consequences on the market outcome. Policy recommendations to fight against consumer biases, as well as the main counterarguments put forward by libertarians, will finally be discussed.
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Bernheim D, Rangel A (2009) Beyond revealed preferences: choice-theoretic foundations for behavioral welfare economics. Q J Econ 124(1):51–104
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Bienenstock, S. (2019). Consumer Bias. In: Marciano, A., Ramello, G.B. (eds) Encyclopedia of Law and Economics. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-7753-2_655
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DOI: https://doi.org/10.1007/978-1-4614-7753-2_655
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