DOES INCOME INFLUENCE RATIONAL DECISIONS?

Huai-Chun Lo¹, Ming Jing Yang², Cheng-Tsu Huang³ and Ching-Yuan Chien⁴

¹Yuan Ze University, Division of Finance, College of Management, Taiwan
²Feng Chia University, Department and Graduate Institute of Finance, College of Finance, Taiwan
³National Central University Taoyuan, Department of Business Administration, Taiwan
⁴Yuan Ze University, College of Management, Taiwan

This study explores the impact of income on customer loyalty so as to verify whether consumer decision-making is bounded by rationality or not. The empirical findings show that income positively affects customer loyalty in choosing leisure parks. Specifically, high-income customers prefer to reduce the time cost of information collection. Therefore, they are more inclined to choose a specific resort or a leisure activity park of a particular brand rather than spend their time searching and planning for the most appropriate location of a leisure activity park. This result supports the notion that customers’ consumption decisions are bounded by rationality, not for the purpose of making the optimal decision, but in order to pursue satisfying their own needs instead.

Keywords: income, rational decision, loyalty, bounded rationality, decision choices

JEL Classification: A10, D01, D12, D52