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Satisficing decision procedure and optimal consumption-leisure choice

By Sergey Malakhov

Abstract

The paper argues that when a consumer searches for a lower price, a satisficing decision procedure equalizes marginal costs of search with its marginal benefit. The consumer can maximize the utility of his consumption-leisure choice with regard to the equality of marginal values of search. Therefore, the satisficing decision procedure results in the optimizing consumer behavior. The paper formulates the analytical relationship between savings on purchase, willingness to pay, and the time horizon of the consumption-leisure choice, which can be verified by careful psychological field studies.

Topics: D11 - Consumer Economics: Theory, D83 - Search; Learning; Information and Knowledge; Communication; Belief
Year: 2012
OAI identifier: oai:mpra.ub.uni-muenchen.de:49461

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