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Markets Fo Heterogeneous Products: A Boundedly Rational Consumer Model

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Executive Summary

The paper is based on the acknowledgement that properties of markets stemming from features of demand are too frequently overlooked in the economic literature, and a re-balancing is necessary to properly account for theoretical and empirical phenomena. The authors sustain that one of the most relevant reasons for the neglect of the role of demand is the lack of an adequate representation of consumers. This claim is particularly relevant for evolutionary economics since its critique to the mainstream approach stopped at the representation of firms. The standard utility maximization approach to consumers' theory is even less defensible than the related assumption of producers' rationality, given the lack of competitive pressure on consumers.

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