The complexity of the consumer problem

Itzhak Gilboa*, Andrew Postlewaite, David Schmeidler

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


A literal interpretation of neo-classical consumer theory suggests that the consumer solves a very complex problem. In the presence of indivisible goods, the consumer problem is NP-Hard, and it appears unlikely that it can be optimally solved by a human. Two implications of this observation are that (i) households may imitate each other's choices; (ii) households may adopt heuristics that give rise to the phenomenon of mental accounting.

Original languageEnglish
Pages (from-to)96-103
Number of pages8
JournalResearch in Economics
Issue number1
StatePublished - Mar 2021


  • Computational complexity
  • Consumer theory
  • Mental accounting


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