Why is the idea of consistent preferences critiqued in consumer choice theory?

The idea of consistent preferences is critiqued in consumer choice theory due to its unrealistic assumptions and limitations.

Consumer choice theory is based on the assumption that consumers are rational and have consistent preferences. This means that if a consumer prefers good A to good B, and good B to good C, then the consumer must prefer good A to good C. This is known as the transitivity assumption. However, this assumption has been widely critiqued for being overly simplistic and unrealistic. In reality, consumer preferences can be influenced by a variety of factors such as emotions, social influences, and cognitive biases, which can lead to inconsistent or irrational choices.

Another critique of the idea of consistent preferences is that it assumes that consumers have perfect information and can accurately compare all available options. This is often not the case in real-world situations. Consumers may lack the necessary information to make informed decisions, or they may be overwhelmed by the sheer number of options available, leading to inconsistent preferences.

Furthermore, the idea of consistent preferences assumes that consumer preferences are stable over time. However, preferences can change due to factors such as changes in income, tastes, or circumstances. For example, a consumer may prefer a luxury car to a budget car when their income is high, but prefer the budget car when their income decreases. This dynamic nature of consumer preferences is not captured by the idea of consistent preferences.

Lastly, the idea of consistent preferences is critiqued for ignoring the role of context in shaping consumer choices. Research in behavioural economics has shown that the context in which choices are presented can significantly influence consumer decisions. For instance, the way options are framed, the presence of default options, and the order in which options are presented can all affect consumer choices, leading to preferences that may appear inconsistent.

In conclusion, while the idea of consistent preferences provides a useful starting point for understanding consumer behaviour, it is critiqued for its unrealistic assumptions and limitations. A more nuanced understanding of consumer behaviour needs to take into account the various factors that can influence consumer choices and lead to inconsistent preferences.