What are the approaches to consumer behavior?
The most popular approaches to consumer behaviour can be divided into cognitive, behaviourist and psychodynamic categories.
Cognitive approach to consumer behaviour focuses on information processing capabilities of consumers (Schmitt, 2003)..
What are the cardinal and ordinal approaches to consumer behavior?
Cardinal utility enables consumers to rank the magnitude of how much one prefer one good on other.
On the case of Ordinal utility it does not try to give the magnitude of how much a consumer prefer a good..
What do you mean by ordinal approach?
Therefore, as per the Ordinal Utility approach, a consumer observes different pairs of two commodities which would provide him/her the same level of satisfaction.
Among these pairs, he/she may prefer one commodity over the other based on how he/she ranks them in order of utility..
What is ordinal approach to the theory of consumer behaviour?
The concept of ordinal utility states that the level of satisfaction a consumer obtains after consuming various commodities cannot be measured in numbers but can be arranged in the order of preference..
What is the ordinal analysis of consumer behavior?
The concept of ordinal utility states that the level of satisfaction a consumer obtains after consuming various commodities cannot be measured in numbers but can be arranged in the order of preference..
What is the ordinal approach to consumer theory?
Therefore, as per the Ordinal Utility approach, a consumer observes different pairs of two commodities which would provide him/her the same level of satisfaction.
Among these pairs, he/she may prefer one commodity over the other based on how he/she ranks them in order of utility..
What is the ordinal approach?
According to the ordinal approach, utility is a psychological phenomenon like happiness, satisfaction, and welfare.
The ordinal theory is highly subjective and differs across individuals.
Therefore, it cannot be measured in quantifiable terms..
What is the ordinal theory of consumer behavior?
1 The theory of consumer behaviour can be explained using the cardinal and the ordinal utility theory.
The cardinal utility theory assumes that utility can be quantitatively measured using utils, while the ordinal utility theory assumes that utility cannot be measured but ranked according to preference..
- A consumer attains equilibrium under the ordinal utility approach at a point where the indifference curve is tangent to the budget line.
It is because that point gives the maximum amount of utility given the budget constraint of a consumer. - J.R.
Hicks and R.G.D.
Allen, in 1934, propounded the theory of consumer behaviour based on the ordinal approach.
According to this approach, a utility cannot be measured in any quantifiable number.
It could only be measured by giving orders, ranks or preferences. - The basic tool of Hicks - Allen ordinal analysis of demand is the indifference curve that represents all those combinations of goods that give same satisfaction to the consumer.
In other words, all combinations of the goods lying on a consumer's indifference curve are equally preferred by him.
