T. A repeat offender is in mm with the same judge from his previsrua mass. In the past the defendant has
beer: furund tn be either guilty cfw_'3 or not guilty cfw_N. If a judge is susceptible tn the bet hand fallacy,
and the prehabzillty of guilt in each
Decision-Making Under Certainty
Chapter 3
September 1st , 2016
Last Chapter
I
Rational Choice
Decision-Making Under Certainty
I
Rational preferences (transitive and complete)
Econ 436 - Behavioral Economics
I
Choose best item.
I
September 1, 2016
Decision
October 25th , 2016
Intertemporal Choice
Chapter 9
Time Consistency
I
You can either receive:
Intertemporal Choice
I
A: $20 on December 1st
Econ 436 - Behavioral Economics
I
B: $21 on December 11th
I
Time consistent I
October 25, 2016
I
Time inconsistent
Chapters 1-3
Homework #1
1. Determine the largest universe of people in which the
following relations are complete and transitive.
(a) Has a car that is at least as fast as that owned by.
(b) Makes at least as much money as.
(c) Has a current age (in year
October 4th , 2016
Rational Choice Under Risk and Uncertainty
Chapter 6
Choice under uncertainty
Rational Choice Under Risk and Uncertainty
I
Choice under uncertainty -
I
To bring an umbrella or not?
Econ 436 - Behavioral Economics
Rain
Sunshine
Bring
Umb
The Discounted Utility Model
Chapter 8
October 20th , 2016
Interest
The Discounted Utility Model
I
When you borrow (lend) money you pay (receive) interest.
I
Terminology:
Econ 436 - Behavioral Economics
October 20, 2016
Simple vs. Compound Interest
I
Prin
Chapter 1
Agenda
August 23rd , 2016
Course Introduction
What is Economics?
I
What is Economics?
What is economics?
I
Examples:
A Brief History of Economics
Syllabus
Examples
I
Tools
Brief History of Economics
Brief History of Economics
I
I
What is psychol
October 11th , 2016
Decision Making Under Risk and Uncertainty
Chapter 6
I
Decision Making Under Risk and Uncertainty
Econ 436 - Behavioral Economics
I
October 11, 2016
Standard Theory
Imagine that the US is preparing for the outbreak of an unusual Asian
September 13th , 2016
Probability Theory and Judgment
Chapter 4
Probability
Probability Theory and Judgment
I
Probability Theory developed because of gambling.
I
Gambling is essentially as old as the human record.
Econ 436 - Behavioral Economics
I
Dice da
Chapter 2
Agenda
Rational Choice Under Certainty
August 25th , 2016
Rational Choice
Preferences
Rational Preferences
I
Choice under certainty
I
Goal:
Proofs
Indifference and Strict Preferences
I
Axiom -
I
Axioms should be
Indifference Curves
Utility
Binar
9. Suppose you have $100 and good it costs $10 per unit and good B costs $25 per unit. If you have
preferences such that you are always willing to substitute 3 units of good A for 1 unit of good E and
vice versa. 1What is the rational choice?
1|]. In what
1 Analytical Questions [as points eeeh, as points total
1. cfw_a Fbr each of the four lines helm:
i. Circle the type nf the etetementr either A cfw_axiom er D [denitinn.
ii. Circle the name of the statement: either C cfw_campletenesrs, l cfw_indifference.
cfw_3:5
2. Consider the following value function for dollars:
cfw_-3,-9
[a] Calculate the value for the following points cfw_3,3,1.1,2.3. Plot thae points on the above
panel and draw a line through them to plot this value fmetion cfw_please clearly labe
2 Multiple Choice (3 points each, as points total)
1.
Which of the following is a descriptive claim:
a) People should osnsidsr opportunity costs.
b People sometimes overestimate oertain probabilities.
II
c] Peoples choises should not be aEected by adding
13. What is the probability that out of 4 people, at least 2 of them have a birthday in the name month.
cfw_Assuming each month in equally likely to be born in.
_ 12x11x1><9
a] l rexrexrexre
14. Consider the two situations:
I Situation A. - Jacket for $12
13. Consider the prefemnoes: I like peanut butter and jelly1 hot I only want them :in the ratio 2 units of
peanut butter for each 1 unit of jelly. Any additional beyond that ratio is not benecial to me. What
other point is on the same indifference curve a
4. How many combinations of birthdays are there for two individuals:
5. When looking at a large data set of used car auctions, there 1was a relatively large price difference between
cars that had 19999 miles was these that had sense. This large price diff
3. You are watching the presidential debate, and trying to gure out whether the candidate is a liar cfw_L.
If the candidate is liar. then they tell the truth cfw_T 10% of the time and they lie cfw_F 90% of the time.
If they are not a liar, then they tell
l. Suppoee you roll two dioe. Which pair of events helm.r is dependent.
a] Dland D2=4
h DI+D2=4and 32:1
3
e] Dl=1andD2=
d] D1+DZ=TendD2=5
17. Consider a. random Word that has a. length of 4 letters and can only have the BE lowereaee letters.
What. is the
Chapters 4-5
Homework #2
1. Consider a class with N students. Calculate the following
probabilities: (it may help to answer the question for N = 2
initially, and work your way up. Also assume that there are
365 days in the year, and being born on each day