SUNK COSTS OF CONSUMER SEARCH: ECONOMIC RATIONALITY OF SATISFICING DECISION
AbstractThe paper argues that sunk costs’ sensitivity can lead to the optimal consumption-leisure choice
underprice dispersion. The increase in quantity to be purchased with the extension of the time horizon of the
consumption-leisure choice equalizes marginal costs of search with its marginal benefits. The implicit optimal
choice results in the explicit satisficing decision. The transformation of cognitive mechanism of discouragement
into satisficing happens only in the “common model” of consumer behavior. The paper argues that the cognitive
mechanism of aspiration takes place when consumers try to get marginal savings on purchase greater than the
wage rate and, therefore, they follow the “leisure model” of behavior where both the marginal utility of labor
income and the marginal utility of consumption become negative.
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