The Cost and Benefit of Consuming in Smaller Bundles

Ben David Nissim¹, Benzion Uri²

¹Emek Yezreel Academic College, Emek Yezreel, Israel.
²Ben Gurion University, Beersheba, Israel.

DOI: 10.4236/tel.[phone]                

Abstract

Existing classical theory cannot explain consumer behavior of cutting consumption into smaller bundles instead of consuming everything in one bundle. We present a model that separates consumer behavior into two steps. At first, the consumer decides on the amount of working hours, which defines his income. In the second step, s/he decides on the number of consumption bundles. Since a consumer has larger utility when cutting consumption into smaller bundles, while on the other hand s/he faces higher costs when buying smaller bundles, s/he can take both factors into consideration when deciding on the optimal number of consumption bundles.

Keywords

Consumption, Bundles

Conflicts of Interest

The authors declare no conflicts of interest.

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