Modeling Customer Bounded Rationality in Operations Management: A Review and Research Opportunities
39 Pages Posted: 29 Mar 2017 Last revised: 14 Oct 2017
Date Written: March 28, 2017
Many studies in operations management started to explicitly model customer behavior. However, it is typically assumed that customers are fully rational decision-makers and maximize their utility perfectly. Recently, modelling customer bounded rationality has been gaining increasing attention and interest. This paper summarizes various approaches of modeling customer bounded rationality, surveys how they are applied to relevant operations management settings, and presents the new insights obtained. We also suggest future research opportunities in this important area.
Keywords: Bounded rationality, behavioral operations, customer behavior, operations management
JEL Classification: C44, M11
Suggested Citation: Suggested Citation