Download or read book Why Consumers are Not Sovereign written by John F. Tomer and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: According to mainstream economics, it is the self-interest motive (the invisible hand) that leads firms in competitive markets to supply what consumers want (consumer sovereignty). When markets function ideally, the result is said to maximize the net benefits to society. The purpose of this paper is to explain why, contrary to mainstream economics, competitive markets, for important noneconomic reasons, often fail to serve the best interests of society. Akerlof and Shiller (A&S) in Phishing for Phools (2015) have given considerable thought to why markets too often fail. They fail when business people behaving in a purely self-serving way utilize manipulation, deception, and trickery to take advantage of their customers. This happens when buyers act foolishly for psychological reasons, for lack of information, and because they do not know what they want. Businesses learn about these unsophisticated buyers, prime them, and set a trap for them. The result is behavioral market failure: consumers wind up paying too much for products they do not need.The A&S perspective needs integration with dual motive theory (DMT). According to DMT, self-interest derives from humans' reptilian brain. Empathy derives from humans' mammalian brain. According to a recent, important interpretation, self-interest is primal, and a person's empathic capacity plays a restraining or conditioning role with respect to self-interest, especially when self-interest is excessive. Too often business people act out of excessive self-interest leading them to take unfair advantage of customers. The DMT perspective suggests this is not inevitable as humans can develop their empathic capacities and become less self-interested. If so, a business might develop a socially responsible orientation and overcome its negatively opportunistic orientation. Integrating the A&S and DMT perspectives improves greatly understanding of why markets often fail for behavioral reasons and what can be done about it.