Many public health campaigns assume that if individuals are fully informed about the long-term health risks of consuming sugary drinks, they will immediately reduce their consumption.
Which of the following best explains why traditional economic theory supports this assumption, and what it assumes about individual decision-making?
Traditional theory assumes consumers have bounded rationality, meaning they will change their behavior once information costs are reduced to zero.
Traditional theory assumes consumers are rational utility-maximisers who possess perfect information and have the perfect self-control to act on it.
Traditional theory assumes consumers always prioritise long-term health over any short-term utility derived from consumption.
Traditional theory assumes consumers are purely altruistic, aiming to minimise the negative externalities imposed on public health services.
