5 - like a steak right after lunch is much less than if you...

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Expected Utility Theory 05/12/2007 13:22:00 Errors of odds Sample size neglect- ignoring the sample from which we’re basing our  judgements.  Gambler’s fallacy- believing if you had a string of bad luck that your luck is  about to change. Conjunction fallacy – believing the likelihood of two conjunct events is lower  than the likelihood of the separate events Availability bias- thinking that the likelihood of a plane crash is much higher  than a car crash, when the opposite is true Planning fallacy – inability to recognize mundane details when planning things  (we think we’ll finish something much sooner than we actually finish) Errors of valuation Presentism – how much you’d like something right now (ie, how much you’d 
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Unformatted text preview: like a steak right after lunch is much less than if you were hungry) o Go shopping on a full stomach o Using current state to evaluate the situation Comparing to the past- Prospect theory- harder for us to part with $5 than we feel it is good to gain $5. Ie: losing $5 is worse than finding $5. Endowment effect- when we consider parting with something, we think more conservatively than gaining something. Selling a $5 mug for $7, when the buyer is offering $2. Temporal discounting - $10 now or $12 in a week, ppl will choose $10 now. 05/12/2007 13:22:00 05/12/2007 13:22:00...
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This note was uploaded on 04/07/2008 for the course EC 10 taught by Professor Mankiw during the Spring '08 term at Harvard.

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5 - like a steak right after lunch is much less than if you...

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