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DOI: https://doi.org/10.63345/ijrhs.net.v14.i5.4
Vandana M. Dodiya
Assistant professor
Dept of Economics
The Maharaja Sayajirao University of Baroda.
Gujarat, 390002.
Abstract— Rational Choice Theory has traditionally been employed to explain consumer behavior based on the assumption that consumers possess stable preferences and make unbiased and objective judgments in selecting products maximizing their utility. Nevertheless, a significant number of studies from diverse disciplines, such as economics, psychology, marketing, and institutional studies, challenge these basic concepts. Specifically, it has been found that consumer decisions may be influenced by emotional experiences, cognitive constraints, social factors, cultural background, and institutional environment beyond the boundaries of rational decision-making. Thus, modern consumer behavior studies have become focused on developing realistic decision-making models of consumer behavior. This paper seeks to discuss the latest theories regarding consumer behavior and the importance of integrating emotional, behavioral, and institutional perspectives in explaining this issue. Specifically, various theories about consumer decision making will be discussed in order to present a holistic view of the consumer behavior in the context of these approaches. Behavioral economics, consumer psychology, marketing, and institutional economics provide a number of studies addressing different aspects of consumer decision-making and behavior, including the role of emotions in decision-making, the impact of bounded rationality on preferences and choices, heuristic and bias approaches, decision-making under uncertainty and loss avoidance, consumer culture, behavioral rules, and institutional influences on consumer behavior. Recent studies in consumer decision-making highlight new dimensions of this phenomenon, suggesting that stable preferences and rational choices are not always valid assumptions. For example, ONE behavioral framework, models combining emotions and rational decision-making, and institution-oriented explanations of consumer decision-making have recently attracted the attention of scholars. It becomes evident that consumer behavior can hardly be understood as a result of objective and rational judgments. Emotions play a key role in the formation of perceptions, preferences, and purchasing intentions. Moreover, behavioral processes such as heuristics, frame effect, and loss aversion are involved in making decisions about purchases. At the same time, cultural, social, market-related, regulatory, and technological institutions contribute to shaping consumer behavior. Contemporary studies show that consumer decision-making is a dynamic process based on emotional, behavioral, and institutional factors. This review contributes to the growing body of consumer research in different fields of study and provides a holistic picture of consumer decision-making. It demonstrates the weaknesses of traditional rational-choice approach and proves the benefits of adopting multi-dimensional perspective on consumer behavior. The results are relevant to academic researchers, marketers, business practitioners, and policy-makers in analyzing consumers’ behavior in modern markets. Future research needs to focus on creating integrated consumer models based on interactions of psychological, behavioral, institutional, and technological variables.
Keywords— Consumer Decision-Making, Rational Choice Theory, Behavioural Economics, Emotional Consumption, Institutional Theory, Consumer Behaviour, Heuristics, Prospect Theory, Consumer Psychology, Market Institutions.
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