Fitch%20-%20Class8%20F10-%20Behavioural%20Economics%20I

Fitch%20-%20Class8%20F10-%20Behavioural%20Economics%20I -...

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emand Fall 2010 UGBA101A-03 Microeconomic Analysis for Slide 1 Chapter 4 Individual and Market De Business Decisions Class 8 Prof. Todd Fitch
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emand BEHAVIORAL ECONOMICS 5.5 Recall that the basic theory of consumer demand is based on three assumptions: (1) consumers have clear preferences for some goods over others; (2) consumers face budget constraints; and (3) given their preferences, limited incomes, and the prices of ifferent goods, consumers choose to buy combinations of goods Slide 2 Chapter 4 Individual and Market De different goods, consumers choose to buy combinations of goods that maximize their satisfaction or utility. These assumptions, however, are not always realistic.
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BEHAVIORAL ECONOMICS 5.5 Perhaps our understanding of consumer demand (as well as the decisions of firms) would be improved if we incorporated more realistic and detailed assumptions regarding human behavior. This has been the objective of the newly flourishing field of behavioral economics . Slide 3
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This note was uploaded on 11/23/2010 for the course UGBA 101A taught by Professor Mccullough during the Fall '08 term at Berkeley.

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Fitch%20-%20Class8%20F10-%20Behavioural%20Economics%20I -...

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