BE 08 Mental Accounting - Sunk Costs Loss Aversion Endowment.pptx

BE 08 Mental Accounting - Sunk Costs Loss Aversion Endowment.pptx

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Behavioral Economics Professor Joseph Lavallee (‘Joe’) [email protected]
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Groups Sit with your group.
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Books nt$290
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Replications Due Week 8 Will be marked late if not received by SATURDAY, NOVEMBER 3. (Reduced midterm grade.) Will not be graded if received after SATURDAY, NOVEMBER 10. (Midterm grade = ‘0’)
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TODAY’S QUIZ - 01wk08
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QUIZ RESULTS Come get your quiz when I call your group.
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Behavioral Economics: Homo sapiens vs. homo economicus
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So far: The Rational Choice Model Diverse Motives (Social self, hot cognition) Choices - Do we know how much we like something? Decoy Effect Loss Aversion Endowment Effect Expectations The Course
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Last Week: CHOICES II -- Prices: Do we know how much things are worth? OPPORTUNITY COST NEGLECT ANCHORING & ARBITRARY COHERENCE The Course
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Half of you saw this... How old was Gandhi when he died? Was he 118? If not, how old?
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...and half of you saw this How old was Gandhi when he died? Was he 38? If not, how old?
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Anchor = 118 Anchor = 38 Average = 82.7 years old (n = 24 students) Average = 84.2 years old (n = 18, removing students who said ‘78’) Average = 61.2 years old (n = 36 students) Average = 57.9 years old (n = 30, removing students who said ‘78’)
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So, were you anchored?
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Half of you saw this... Is the percentage of African nations that belong to the UN larger or smaller than 10%?
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...and the other half saw this Is the percentage of African nations that belong to the UN larger or smaller than 65%?
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Anchor = 10% Anchor = 65% Average = 23.7% (n = 32 students) Average = 21.2% (n = 31, removing student who said ‘100%’) Average = 45.1% (n = 28 students) (None of you gave the correct answer.)
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So, were you anchored?
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Mighty Quinn’s Barbecue
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How much for Mighty Quinn’s BBQ? What are the last 3 digits of your SID? How much would you pay for this meal?
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How much for Mighty Quinn’s BBQ? Last 3 of SID 010 to 345 will pay average $306 Last 3 of SID 380 to 904 will pay average $421 (28 students in each group) (Removed 1 student who said ‘0’)
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