Consumer behaviour: evolution of preferences and the search for novelty
Abraham Garcia
#2009-005
Evolution of consumers' preferences has been recognized by many scholars
as being key to understanding technological change. However, mainstream
economics cannot account for the seemingly irrational behavior of
consumers based on changes in taste – consumer theory lacks exibility
and accuracy to explain changes in consumer behavior. Adopting a
behavioral psychology perspective, this paper argues that there is a
rational pattern in the change of consumers' tastes. I argue that
behavioral psychology offers us a unique perspective to solve some of
the paradoxes of consumer behavior. This paper incorporates exibility
into CES utility function to more adequately account for, and
differentiate between, habit formation routines. A model is developed in
which habit formation and consumption of new goods are interrelated.
UNU-MERIT Working Papers
ISSN 1871-9872