Towards a realistic view of consumer behaviour

Marginal utility (MU) theories of consumer demand assume that consumers try to maximise a generic benefit (‘utility’) by selecting purchases giving equal marginal utility per unit of cost, from which are predicted the observed relationships between price changes and quantities of demanded consumer goods. Attempts to remedy the explanatory shortcomings of MU theory usually supplement it with additional assumptions. This paper proposes taking that approach to its logical conclusion by using consumer and psychological research findings not to supplement but to replace the concept of utility entirely with realistic explanations of consumer behaviour.