Unformatted text preview: udent 2 > Student 3: In this example, no one likes Student 4 because she has a reputation of being a slob. What is your decision
of matching these students as an administration manager?
Exercise 17 If you are working for an insurance company and your job was to underwrite policies in which
you had to set the price of certain disasters according to a resident’ state., how much would you charge
residents of New York, Florida, and California for the following types of insurance: ‡ood insurance, hurricane
insurance, …re insurance, auto insurance, and earthquake insurance? Rank the …ve types of insurance in order
from the most to least expensive for each state and provide a brief explanation for your ranking.
Exercise 18 Provide an explanation for the following behavior. Discuss whether the behavior violates the
assumption of rationality or not.
(a). Jennifer is shopping and sees an attractive shirt. However, the price of $50 is more than she is willing
to pay. A few weeks later, she …nds the same shirt on sale for $25 and buys it. When a friend o¤ ers her $50
for the shirt, she refuses to sell it. Explain Jennifer’ behavior.
(b). After a widely reported earthquake in California, many people call their insurance company to apply for
(c). In January, many …tness clubs o¤ er special annual membership fees to attract customers who have
made New Year’ resolutions to exercise more. Even when these memberships are costly, many of these new
customers seldom visit the gym to work out. 3...
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- Fall '12