Critics suggest that rational behavior cant be true because

Critics suggest that rational behavior can\'t be true because: 1) people make mistakes, 2) people make decisions by habit, and 3) people often take into account the interests of others. Why don\'t these issues invalidate the assuption of rational behavior?

Solution

The mistakes committed by the consumers will most of the times cost the consumer in terms of loss of income or purchasing power. Due to this there will be lesser or least amount of chances that the consumer will actually commit mistake rather he will always try not to. The decisions taken out of habit usually are for those products which are tested for quality and price. The consumer makes it a habit considering the price and tastes. The decisions taken by imitating others consumption pattern will be less likely as these goods are generally prestige goods which are out of the purview of law of demand or one can say this is an exception to law of demand.