Irrational Consumer Research Articles

Non-functional demand model vs functional demand model: prospects for competitiveness in a transforming world

The purpose of the article is to analyse the problem of changing the relationship between non-functional and functional demand. The main task of the presented research is to define the most competitive model (based on functional or non-functional demand) of consumer behaviour in the conditions of the economy of the 20s of the XXI century. To solve this problem, we studied the structure of consumer demand: functional and non-functional ones. We identified the features of non-functional demand, and considered the reasons for its expansion in modern society. Moreover, paper highlights fixing changes in consumer orientations, which resulted in the search for satisfaction not only of material needs, but also aesthetic, emotional, and social ones. It allowed us to formulate a conclusion on the existence of objective reasons for the spread of non-functional demand. Within the framework of non-functional demand, we perform an analysis of origin and expansion of the downshifting phenomenon through the transformation of the basis of functional demand. The authors believe that qualitative changes in global socio-economic development have revolutionized the theoretical concepts of rationality, which are the basis of the functional demand model. Nevertheless, authors criticise the interpretation of downshifting as a model of irrational consumer behaviour, and put forward a hypothesis on the legitimacy of this new phenomenon to be analysed within the framework of functional demand. The authors consider the assumption of the possibility of changing the objectives of society to be a condition for the realization of this hypothesis. it can cause the transformation of «efficiency» concept over the past 300 years. Paper forecasts increasing of non-economic goals rationality, cooperation, mutual benefits, and the coupling of knowledge and technology to moral, cultural, and ethical principles and norms. As a result, in the contrary to the widespread assessment of downshifting as a deviant form of consumer behavior, there was put forward hypothesis considering downshifting as a part of classical consumer choice matrix, taking into account the transformation of this matrix itself.

Modeling the evolution of collective overreaction in dynamic online product diffusion networks

With the development of e-commerce, collective overreactions such as buying frenzy have become prominent. However, studies have rarely investigated the mechanism of irrational consumer behavior at the group level. To investigate the evolution of collective overreaction in dynamic online product diffusion networks, we employed a sequential multiple-methods approach. A conceptual model is constructed to capture the influence of social network dynamic evolution on individual irrationality. An agent-based model (ABM) under different network dynamic growth mechanisms is implemented and verified. The findings revealed the following. In external dynamic growth mechanisms, key opinion consumer (KOC) connection can lead to positive collective overreaction (i.e., the adoption rate of consumer groups spikes). This effect fades as the probability of KOC connection increases and stabilizes as the node change rate decreases. Random connection is prone to negative collective overreaction (i.e., a sudden and sharp decline in the adoption rate of consumer groups), and key opinion leader (KOL) connection exhibits both positive and negative collective overreaction. Increasing the edge change rate increases the frequency of negative collective overreaction in KOL connections. In internal dynamic growth mechanisms, KOL and KOC connections are prone to negative collective overreaction; increasing the edge change rate can reduce the frequency of negative collective overreaction in KOL overreaction, and an appropriate edge change rate can inhibit the emergence of negative collective overreaction in KOC connection. This research contributes to the area of internet product marketing and provides a new basic framework through which to combine psychology and the ABM.

Irrational behavioral models of personal finance and their evolution in the digital economy

Aim. To review the evolution of scientific concepts investigating the motives for decision[1]making based on irrational consumer behavior and to identify real changes in behavioral models of personal finance. Objectives. To examine the evolution of scientific concepts of the world’s leading scientists on decision-making motives in the consumer market; to consider the effects of irrational consumer behavior; to identify key changes in consumer buying decision behavior caused by digitalization. Methods. The article is based on the analysis of scientific works of leading classical economists, interdisciplinary scientific research of modern foreign and domestic scientists devoted to the issues of decision-making in the field of consumption. The institutional approach was applied, which allowed us to study the evolution of irrational behavior in the field of personal finance depending on the dominant social values. Results. In the process of analyzing theoretical provisions of famous scientists up to the middle of the twentieth century, the justification of consumers’ decision-making in the consumer market based on their desire to maximize pleasure, utility of welfare is presented. Such behavior can be attributed to irrational behavior. Gradually, taking into account the market regulators of consumption opportunities, scientists come to the conclusion about the rational behavior of individuals. However, by the end of the twentieth century, the position of scientists changes towards limited rationality due to the inability of individuals to adequately assess the array of information affecting decision-making in the consumer market. On the basis of conclusions drawn by modern scientists in the framework of interdisciplinary research, such a new direction of economic science as “behavioral economics” emerges, which combined the knowledge of both economics and psychology. Modern research has shown some effects in behavioral finance related to the irrationality of consumer behavior when making a purchase decision: the Veblen effect, the Diderot effect and others. The latest research on the impact of digitalization on consumer behavior reflects the changes taking place in consumer behavior towards rationalization. Conclusions. The concepts and models describing the peculiarities of irrational behavior of individuals related to decision-making and based on irrational spending of personal financial resources from the point of view of classical economic science are considered. The evolution of scientific concepts of irrational behavior of the world’s leading economists during two centuries is presented. The effects of irrational consumer behavior proposed by scientists in the framework of interdisciplinary research are studied. Among them are the Veblen effect, the Diderot effect. The influence of digitalization on personal finance decision-making is shown.

System dynamics analysis of Retailer's emergency strategies when facing irrational demand and supply disruption

Emergency events, such as epidemics, typhoons, and floods, can lead to increased demand instability, resulting in a higher risk of supply–demand imbalances in supply chains. Companies often face challenges in managing irrational demand and supply disruptions due to their limited experience. In this paper, we utilize system dynamics (SD) and susceptible-infected-recovered (SIR) model to examine the phenomenon of irrational consumer demand within the context of supply disruption. Specifically, we focus on analyzing such demand patterns across three external supply scenarios: sufficient, stable, and learning types. Furthermore, we consider emergency strategies (pricing, transshipment, and hybrid) for the retailer based on the consideration of either delayed or non-delayed delivery mechanisms. The results show that the upsurge of irrational demand following an emergency outbreak is usually short term and enormous. A higher level of panic effect leads to increased irrational demand, whereas a stronger conformity effect results in faster increases and declines of such demand during early and later stages, respectively. Furthermore, the emergency strategies should aim to mitigate the negative impacts of the disruption retailer operations and improve the retailer's emergency capabilities. Numerical analysis indicates that the retailer can increase its profit in the sufficient-type external supply scenario by adopting a pricing strategy that incorporates a delayed delivery mechanism. When facing a stable-type scenario, the recommendation is the hybrid strategy. In a learning-type scenario, the retailer should consider using the hybrid strategy with non-delayed delivery as the default option, but use a pricing strategy if delayed delivery is necessary.

The Impact of Anchoring Effects, Loss Aversion, and Belief Perseverance on Consumer Decision-Making

In today's intricate consumer environment, consumer decisions are influenced by various cognitive biases, including Anchoring Effect, Loss Aversion, and Belief Perseverance. These cognitive biases can lead to irrational consumer decision-making with extensive and far-reaching implications for individuals and the market. This study employs a comprehensive literature review approach and analyzes multiple real-world cases and studies to illustrate the impact of these cognitive biases in different domains. The findings of this study reveal that the anchoring effect influences consumers through price and information anchors. Loss aversion makes them more cautious and risk-averse, while belief perseverance leads them to cling to their pre-existing beliefs, even in the face of contradictory evidence. These cognitive biases significantly affect political, investment, and consumption decisions, potentially resulting in irrational choices and resource allocation. This study underscores the influence of cognitive biases in consumer decision-making and proposes strategies to challenge and ameliorate these biases. Such insights hold practical significance for consumers, policymakers, and marketing professionals, contributing to enhancing decision quality, mitigating the risks of irrational behavior, and improving economic well-being.

Research on the Analysis and Impact of Internet Celebrity Economy on Consumers’ Irrational Buying Behavior in the Big Data Environment

Abstract In the context of big data, the internet celebrity economic marketing model has gradually become one of the mainstream online marketing models. Internet celebrities use their special influence and characteristics of the times to bring revolutionary changes to product promotion. This phenomenon carries more economic value and has significant social impact. At the same time, the development of the Internet celebrity economy has triggered concerns that irrational consumer behaviour may disrupt the e-commerce market. This paper investigates the influence of the Internet celebrity economy on consumers’ irrational purchase behaviour in this environment. To do so, the K-means clustering method is utilized to collect data on both internet celebrity economies and consumers’ irrational buying behaviour. The study develops a research model with the independent variables of internet celebrities’ professional degree, credibility, and fan attraction, and the dependent variable of consumers’ buying behaviour, with consumers’ buying sentiment serving as an intermediary variable. The empirical analysis demonstrates that the Internet celebrity economy significantly impacts consumers’ irrational purchase behaviour, with higher levels of professionalism, credibility, and fan attraction among internet celebrities associated with greater likelihoods of irrational consumer purchasing. Based on these findings, two strategies are proposed to mitigate irrational purchasing behaviour: improving the professional quality of internet celebrities and promoting rational consumer buying practices.

How Does Decoy Pricing Affect Purchasing Decisions?

Abstract This paper is devoted to the cognitive biases of decoy pricing, which has become the subject of interest of retail companies in recent years. The paper analyses the principles of the decoy effect with regard to consumer behaviour in the Czech Republic (which represents customers of the Eastern Europe). The analytical part of the paper focuses on examination of often irrational consumer decision-making process, with respect to age, gender, product group, and other factors. A combination of questionnaire survey (N=200) and interviews (N=32) was used. The results indicate a significant influence of the generation the consumer belongs to, further differences in decision-making according to gender, as well as differences in effects in various product categories. The findings may be utilised by companies considering the use of decoy pricing strategies in the Czech market.

An Analysis of Status Quo Bias and Its Applications in Behavioral Economics

Status quo bias is a common psychological bias in decision-making, and this kind of bias is strong enough to impact or bother peoples personal lives. So it is quite important to explore more about it. This article, through literature research and case analysis, indicates how the status quo bias comes out in aspects of brain science and how it applies to online medical services and consumer behavior. In conclusion, it was discovered that some signal changes in certain neurons in the brain lure people to accept the current situation. Besides, in terms of medical services, due to previous behavioral habits, people tend to ask for help at a local hospital rather than turn to online medical services. To reduce the status quo bias, service providers can increase the attractiveness of alternative options to the status quo. In terms of consumption, most irrational consumers will choose to ignore the free return policy when they shop. Merchants can take targeted measures, such as offering shipping insurance and significantly improving product quality, to fully explore the status quo bias.

The impact of end consumers for renewable energy development through a behavioral choice in favor of clean energy

This article examines the challenges of renewable energy development in the context of global sustainable development priorities, the world’s achievement of climate neutrality by 2050, and the current challenges of financing energy transformation programs. The shortcomings of state regulation of the renewable energy sector due to the introduction of a feed-in tariff, which in the case of Ukraine has had negative consequences for the energy market, foreign investors, and the state budget, are discussed.The presented hypothesizes that irrational consumer choices and behavioral factors that influence purchasing decisions and the utility of the transaction may affect renewable energy development. The economic potential of attracting European Union end-user’s funds to finance renewable energy measures using behavioral economics tools, including incentives for consumer choice in favor of clean energy products, is assessed.The logic of consumer choice of buyers belonging to different age categories, with different income levels and permanently residing in Ukraine, Slovakia, Germany, Austria, and the Czech Republic between products produced using conventional energy and “clean” energy was investigated, the identified regularities were described and conclusions were drawn.It is shown that the use of effective instruments of behavioral economics in the context of stimulating informed consumer choice in favor of products produced using “clean” energy can create conditions for attracting additional funds from end users to the development of renewable energy.In the process of public policy moderation in the energy sector, it is proposed to stimulate the introduction of the market and behavioral instruments to stimulate consumer demand in favor of products produced using clean energy, with the formation of a transparent chain of fixing the use of clean energy at all stages of production.
 JEL classіfіcatіon: М30, М31, М38, R11

Will COVID-19 affect consumer irrational behavior? A survey of China's consumer market based on FAHP

Under the influence of COVID-19, people's psychology and consumer behavior have changed somewhat from the pandemic, and these changes have not only affected the stability of society but also created obstacles for the government to maintain the balanced and healthy development of the national economy. Our study uses a two-step approach to investigate the factors influencing the irrational shift in residents' consumption behavior under COVID-19. In the first step, FAHP was executed to determine the relative importance of the factors in the proposed research model. In the second step, the study hypotheses were tested using SEM with data from 150 respondents in 66 cities across 20 provinces in China. The FAHP results show that perceived scarcity has the highest weight of influence on irrational shifts in consumer behavior under COVID-19. The empirical findings suggest that perceived scarcity, bad mood, and changes in consumer preferences partially mediate the irrational changes in residential consumption behavior during a pandemic. Meanwhile, residents' positive perceptions of government pandemic prevention measures partially negatively moderated the generation of irrational consumer behavior during the pandemic. Thus, our study not only achieves interdisciplinary theoretical and methodological integration but also provides the government with a quantitative measure of the utility of COVID-19 management measures in mitigating irrational changes in residents' consumption behavior during a pandemic. Not only can we enrich the literature on irrational consumption behavior in related consumption behavior studies, but also provide theoretical, empirical, and practical case support for the Chinese government's response to control the irrational consumption behavior of the population under public health emergencies.

Influence of intrapersonal conflict on women’s consumer behavior

The research aimed at testing hypotheses about the link between various types of internal conflict and women’s impulse purchases. The most detailed consideration is the value-semantic conflict as a phenomenon caused by the interaction of the most important personal structures. The author studied consumer values, subjective financial and personal well-being, as well as varieties of irrational consumer behavior as additional ones: conspicuous consumption and orientation towards materialism. The paper revealed the consistency between certain types of internal conflict of the individual and a certain type of impulse consumer behavior. The patterns found open a wide scope for further development of this problem by introducing additional personality constructs, expanding the sample, and using more accurate diagnostic instruments.

Cancel the deal? An experimental study on the exploitation of irrational consumers

Cancel the deal? An experimental study on the exploitation of irrational consumers

УПРАВЛІННЯ ПОВЕДІНКОЮ СПОЖИВАЧІВ НА ОСНОВІ МАРКЕТИНГОВОГО ЦІНОУТВОРЕННЯ

The essence of the concept of "consumer behavior" has been studied. Factors influencing it have been identified, including personal preferences, needs, values, and external influences such as advertising, marketing activities, and social factors. Such groups of influencing factors on consumer behavior are characterized, such as: demographic characteristics, psychological factors, social factors, marketing factors (including marketing pricing). Their role in the formation of the purchase decision is determined. The place of marketing pricing in the model of consumer behavior is presented, which provides an understanding of how and why decisions are made to purchase goods or services, how consumers react to various marketing techniques, and which of them the company can apply. Thanks to their use, a better understanding of the behavior of consumers in choosing and purchasing products is achieved, and hence, more effective use of marketing tools. It is noted that a seller who understands the mechanisms of irrational consumer behavior can present goods in such a way as to convince the buyer to give them a higher rating. Four directions of research into irrational consumer behavior are characterized: perception of percentage differences, perception of unrounded endings, influence of relative prices, influence of perception. Management of consumer behavior taking into account marketing pricing includes the use of pricing strategies and tactics to influence consumer decisions about purchasing goods or services. The authors characterized some of these approaches, in particular, price differentiation, price-quality strategy, price leadership strategy, promotions and discounts, free offers, dynamic pricing. It is noted that the buyer's perception of the product price directly affects the sales efficiency and the seller's profitability. Therefore, the marketing department of any firm must be able to predict and model the possible reaction of the consumer to the chosen price strategy, as well as take into account as many psychological factors as possible during its development. Methods of managing consumer behavior based on marketing pricing are highlighted.

Соотношение доходов и расходов как критерий иррациональности экономического поведения потребителя

In the context of the active development of tools for economic interaction that facilitate the population’s access to various financial instruments, the problem of irrational behavior of economic agents is becoming more and more obvious. The reasons for the increase in costs, the criminalization of financial relations and the growth of fraud are often the inability of economic entities to assess the risks and costs of their own actions, due to the desire to extract additional profits and reduce costs.
 Assuming that informational influences from public and state institutions cannot change the behavior of the population due to existing ideas about the possibilities of making a profit, a distorted assessment of financial services, and the ineffectiveness of methods of informational influence, we consider it expedient to obtain new scientific knowledge about irrational behavior. This explains the relevance of the study.
 The article examines the theoretical foundations and empirical characteristics of irrational economic behavior, studies the strategies for distributing funds available to consumers. The aim of the study is to identify signs of irrational consumer behavior when studying the ratio of income and expenses of a subject.
 The conducted empirical research has shown that the indicator of the ratio of income and expenses is a defining indicator of irrational consumer behavior. The authors show the characteristics of irrational behavior, determine the share and level of its manifestation in a sample of consumers. Found that 29 % of respondents regularly go beyond their monthly budget. In this case, the repayment of the difference between income and expenses is carried out, as a rule, by borrowing in the form of consumer lending, overdraft. On the basis of the research carried out by the authors, conclusions are drawn about the prerequisites for the irrational economic behavior of subjects. The results of the study can be used for a preliminary assessment of the prevalence of irrational strategies of consumer behavior, and serve as the basis for programs for their prevention.

Social engineering in the concept of rational and irrational consumer behavior.

In this work, the author researching the process of consumer behavior formation, and considers the possibility of its correction using social engineering methods. The author considers consumer behavior as a separate mandatory element of the product quality monitoring system in the concept of smart consumption. Consumer behavior as a complex of actions and reactions of a public entity in the field of consumption has been considered, assumptions of the economic component of consumer behavior have been formulated, and recommendations for consideration of consumer behavior in the context of social relations have been given. The formation of consumer behavior from the point of view of psychology has been described and considered certain factors that influence the formation of a certain type of consumer behavior. The author has developed strategies for influencing consumer behavior based on social engineering methods. Two approaches to applying strategies to rational and irrational behavior are proposed. The developed strategies will encourage the consumer to participate in the information system of data collection to monitor product quality. The author conducted research, the purpose of which is to determine the target audience that will participate in the process of informing about the product quality monitoring system. As a result of the research, a focus group was formed, which took part in an experiment with the use of strategies to influence consumer behavior.

DID FEAR OF MISSING OUT TRIGGER PANIC BUYING BEHAVIOR AND COGNITIVE DISSONANCE OF CONSUMERS DURING EARLY DAYS OF COVID-19 PANDEMIC? THE MEDIATING ROLE OF PANIC BUYING

Since the breakout of Covid-19 pandemic, irrational consumer behaviors have been observed in all over the world. Drawing on the drive-reduction theory and social comparison theory, this study attempts to explain some part of these irrational behaviors on the basis of the interaction between fear of missing out, panic buying and cognitive dissonance. Fear of missing out is included in this study as an independent variable that leads to cognitive dissonance as a post-purchase behavior. Panic buying is included as mediator variable in suggested model. Data were obtained from 465 respondents who were residents of Turkey and have stockpiled any supplies since the early days of Covid-19 pandemic. In order to test the associated links between the variables, structural equation modelling was utilized. The results reveal that fear of missing out and panic buying both have a significant positive influence on cognitive dissonance. Also, partial mediation impact of panic buying on the relationship between fear of missing out and cognitive dissonance is empirically suggested. The results also provide applicable insights to policy makers and practitioners to mitigate cognitive dissonance of consumers by calming down their fear of missing out and panic buying with a right communication strategy.

Model Construction of Hierarchical Polarization Characteristics Combined with Social E-Commerce Consumer Behavior

In order to analyze the consumer behavior of social e-commerce, this article attempts to explore the irrational consumer behavior factors that affect the audience in the live broadcast of e-commerce Internet celebrities. This paper predicts and analyzes the consumption behavior of social e-commerce and combines the characteristics of hierarchical planning to intelligently process the system to improve the effectiveness of the system. Moreover, this paper constructs a social e-commerce consumer behavior prediction model based on hierarchical polarization characteristics, researches and analyzes multiple factors and performance, and builds an intelligent simulation model. The analysis of the test results shows that the social e-commerce consumer behavior prediction model based on the hierarchical polarization characteristics proposed in this article is effective and can play an important role in the prediction of social consumer behavior.

Multi-Agent Simulation of Product Diffusion in Online Social Networks from the Perspective of Overconfidence and Network Effects

Online social networks (OSNs) have steadily become the primary mechanism of product promotion. However, previous studies have paid little concern to the irrational consumer behavior (e.g., overconfidence) and network effects that influence product diffusion in OSNs. We use overconfidence theory, network effects theory, and evolutionary game theory to build a multi-agent simulation model that captures the nonlinear relationship between individual actions to examine the effects of overconfidence and network effects on product diffusion in OSNs. We found that (1) overestimation is profitable for improving the diffusion level of product diffusion in OSNs and maintaining market stability; however, the closer the degree of overprecision is to 1 (i.e., individuals are more rational), the more stable the market will be. We also found that (2) moderate network effect intensity can better promote product diffusion on the social network. When the network effect intensity is small, the non-overconfident scenario has the highest percentage of adoption. The overprecision scenario has the highest percentage of adoption where the network effect intensity is high. Additionally, we found that (3) the scale-free network is more conducive to the diffusion of products in OSNs, while the small-world network is more susceptible to overconfidence and network effect. This research laid the groundwork for investigating dynamic consumer behavior utilizing a multi-agent method, network effects theory, and a psychological theory.

Brand-consumer relationship of female millennials toward K-beauty

For the last decade, the Korean beauty market has skyrocketed in terms of sales. Despite differences in usage steps, culture, and geography, Korean beauty products are the fastest-growing market segment in Indonesia. In addition, they are aimed primarily at millennial consumers. Therefore, this study looked at the effect of the brand-consumer relationship on the experience of Korean beauty products in Indonesia. The research sample consisted of millennial female users. As a result, 255 valid responses were obtained. Using SEM Lisrel, the study revealed that all study hypotheses were accepted. All the variables had a significant influence on each other. Notably, brand commitment had the strongest impact, and it was significantly related to and contributed more to brand love. The contribution of this brand-consumer relationship stems from the fact that brand commitment is more consistent in achieving brand love than brand experience. Furthermore, it was found that brand experience is more subjective, resulting in irrational consumer behavior toward brand love.

The Relationship Between Free Value-added Model and Irrational Consumer Behavior

The Relationship Between Free Value-added Model and Irrational Consumer Behavior