Limits to Optimal Consumer Problem Solving: A Framework for Consumer Protection Policy

Abstract

Consumers typically are not as knowledgeable nor as “rational” as influential theoretical models postulate. Instead, consumers are characterized by certain biological, psychological and social features which not only constrain their ability to achieve their goals in today’s complex shopping environments, but which also limit their ability to specify appropriate goals in the first place. This paper identifies some of the more important constraints on optimal consumer decision making and emphasizes that public policymakers should give explicit and systematic recognition to these limits in devising future consumer policy.