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Unformatted text preview: ) is not monotonically decreasing in p i . Com-pare with the indirect utility function of the classic consumer model. Problem 9 (Tel Aviv 1999) Tversky and Kahneman (1986) report the following experiment: each participant receives a questionnaire asking him to make two choices, one from © a , b ª and the second from © c , d ª : a. A sure proFt of $240. b. A lottery between a proFt of $1000 with probability 25% and 0 with probability 75%. c. A sure loss of $750. d. A lottery between a loss of $1000 with probability 75% and 0 with probability 25%. The participant will receive the sum of the outcomes of the two lotteries he chooses. Seventy-three percent of participants chose the combination a and d . What do you make of this result? Problem 10 (Princeton 2000) Consider the following social choice problem: a group has n mem-bers ( n is odd) who must choose from a set containing 3 elements...
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This note was uploaded on 12/29/2011 for the course ECO 443 taught by Professor Aswa during the Fall '10 term at SUNY Stony Brook.
- Fall '10