Economic rational choice theory explained

Alice and Omar are at their local department store to buy a new toaster. There is a low-price everyday option and several more expensive models. To their surprise the second cheapest costs more than three times as much as the basic one. They feel the weight of the two products, check the mechanisms for lowering the bread slices and activating the heating elements, compare the control buttons, but find no discernible differences. The cheaper toaster is the store’s own brand, the store having a longstanding reputation for quality. The more expensive product is a French-sounding make they have never heard of. They feel they should be able to trust the store’s brand but are worried about what the price point signifies in terms of durability. The French product is chrome whereas the cheaper product comes in a shade of blue which matches the colour scheme in their kitchen. After weighing all of the factors they decide to buy the store’s own brand toaster because of its attractive colour.

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Simon Collings
Picture Nick Victor

 

 

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