Using Evolutionary Models of Choice with Consumer Theory Models of Substitute Goods

Abstract

This research presents two evolutionary models of behavior and applies them to basic consumer theory in economics; that is, this research uses modeling concepts involving choice and behavior from various disciplines (most notably behavioral psychology) and reconciles them with consumer decision theory in economics. The economic assumption of the consumer—where they have “perfect information” about which product will provide the most satisfaction—is clearly counterintuitive; we, as consumers, are often unsure of which choice is best for us. The question, then, is “How do consumers really choose the products that they do, and does this behavior tends to promote long-run optimal behavior?” The question will be answered by referring to two models of evolutionary social learning, which attempt to model the decision-making process between two goods that are either perfect substitutes or imperfect substitutes of one another. By helping to answer this question through an examination of both models and a discussion of previous studies and findings in decision theory, this research provides a better understanding of the consumer—one that the “perfect information” assumption precludes.