5.3 Consumer Decision-Making

2026 Syllabus Objectives

By the end of these notes, you should be able to:

  1. Describe and explain models of consumer decision-making (utility, satisficing, prospect), strategies (compensatory and non-compensatory), and how internet shopping affects decisions.
  2. Explain choice heuristics (availability, representativeness, anchoring) and understand point of purchase decisions.
  3. Describe mistakes in decision-making, including System 1 vs System 2 thinking, choice blindness (Hall et al., 2010), and advertising memory.

Objective 1: Models of Decision-Making, Strategies, and Internet Shopping

https://cambridgeassistant.com

What is a Model?

A model is simply a way of explaining how people make decisions when they choose between products or services. Psychologists have come up with several models to help us understand why consumers pick one option over another.

The Utility Model

Utility means usefulness or satisfaction. This model assumes that people are completely rational — meaning they think carefully, logically, and sensibly when they make decisions.

According to the utility model:

  • A consumer looks at all available options.
  • They carefully weigh up the costs and benefits of each one.
  • They choose the option that gives them the most satisfaction (the highest "utility").

Example: Imagine you want to buy a new phone. The utility model would predict that you compare every phone's price, features, camera quality, battery life, and storage, and then logically pick the one that gives you the best overall deal.

Key point: The utility model treats people like perfectly logical calculating machines. However, in real life, people often make quick, emotional, or irrational decisions — which is why this model has been criticised as too idealistic.

The Satisficing Model

Satisficing is a word invented by combining "satisfying" and "sufficing." This model was put forward by Herbert Simon, who argued that people do not always try to find the best possible choice. Instead, they look for an option that is "good enough."

Why do people satisfice?

  • Making the perfect decision takes a lot of time and mental effort.
  • We have limited time, limited information, and limited mental energy.
  • So instead of comparing every single option, we set a minimum standard and pick the first choice that meets it.

Example: You need a new pair of trainers for PE. Rather than researching every brand and comparing hundreds of options, you walk into a shop, find a pair that fits well, looks fine, and costs within your budget — and you buy them. You've satisficed.

Key point: Satisficing is a more realistic model than the utility model because it accepts that humans have mental and time limits. Simon called this "bounded rationality" — our rational thinking is "bounded" (limited) by these constraints.

Sign in to view full notes