Quiz #6, February 24th
What are the innovative features of SMarT plan? What behavioral biases and behavioral economics concepts the SMarT plan plays on? (three of them) What was the criticism of the first implementation of the SMarT plan? What is the pap
Comparison of IA models (like FS and BO models) with reciprocity models (like Rabin model)
What is the reference standard as far as equitable transactions are concerned?
Comparison of IA to reciprocity models How important are int
Peter Kriss will lecture on Tuesday, April 12th about Affective Forecasting Term Paper Submission is due Thursday, April 21st in class. Will not accept late submissions. Send your slides one day before your presentation in ppt format. Final
Hyperbolic Discounting Nave or Sophisticated
Example: Lexi needs to talk to her advisor about what he wants to investigate for her term paper. This is an unpleasant task for her since she thinks that she will make her angry if she cannot come up with a ni
Time Consistent with =1, =1
Nave Hyperbolic Discounter with =1, =1/2
r r h 0 h 0 10 25 8 r h r h r h r h 0 5 25 23 0 5 25 23
Sophisticated Hyperbolic Discounter with =1, =1/2
0 10 25 8 r h r h r h r h 0 5 25 23 0 5 25 23
r r h 0 h
Quiz #11, the last quiz, April 7
Rabin's fairness model. The example we have covered and in class. You should be able to
Find the equilibrium in the original game Create the psychological game from the monetary game Find the equilibrium in the psycho
Study Guide for Final Exam
In the nal exam, there will be three parts:
part I: matching
part II: short answer questions
part III: problems
You should expect at least one question from hyperbolic discounting and at least one question from social
1. Alice is an expected utility maximizer. She has utility 2 for a rainy day, 4 for a cloudy day and 10
for a sunny day.
a. Find the lottery over a rainy and sunny day such that Alice is indifferent between the
lottery and a cloudy day: (R, 3/4; S, 1/4)
1. Experimental economics does not allow deception, whereas psychology does. For experimental
economists, the decision to disallow deception comes from wanting to preserve the integrity of
the laboratory experience and preventing contamination of the subj
Complementary to HW2
The following questions are to help you prepare for the nal exam. It is best to solve the following questions
around the same time you solve assignment #2 since they are on the same topics. The answers for the followi
1. Give an example of external self-control that is voluntarily chosen by agents in real life.
One example of external self-control voluntarily chosen in real life is the tendency of
many people to invest in Christmas clubs, where money is deposited throu
You will nd brief answers to addtional questions posed at the end of homework assignments.
I provide either very short answers or the way to solve the problems. The solutions are not
meant to be complete but they are created to let you check your aswers.
Date: May 9th, 2012
Professor: Elif Incekara Hafalir
(3 points each) There are two columns below. On the left-hand column are
a series of statements and examples. On the right-hand column are a series of
Examples of Behavioral Economics Research
Us data from three US health clubs offering a choice between (empirical study, not experimental)
Paying Not to go to Gym DellaVigna, Malmendier (2006)
A monthly contract with a lump sum fee of approximately $80
Intertemporal Choice II
Click to edit Master subtitle style
Some Emprical Evidence on Dynamic Inconsistency
Attempt to investigate whether individuals choose in a time inconsistent manner as claimed by Strotz (1956)?
Predicting Hunger: The
Introduction and History of Behavioral Economics
What is Behavioral Economics
Interested in the same topics as standard economics Does not assume full rationality Application of psychological research findings and insights to economics Why?
Light/Liberitarian/Soft Paternalism Thaler and Sunstein (2003)
Paternalism: "A policy or practice of treating or governing people in a fatherly manner, especially by providing for their needs without giving them rights or responsibilities." Paternalistic
Purpose of mental accounting? Principles of hedonic framing and implications for marketing. Examples for the adoption of hedonic framing in marketing What is silver lining? Example. What is transaction utility, what is acquisition utility? May give you d
Quiz #4, February 10th
What is endowment effect? Analyze the graphical explanation of endowment effect. What is the gain when person ends up with the object rather than money (from seller/buyer/choser's point of view)? Why they are different? If the endo
Mental Accounting II Thaler 1999
Three important components of MA
How the outcomes are perceived and experienced, and how decisions are made and subsequently evaluated? The frequency with which the accounts are evaluated Assignment of activi
Change in Quiz structure
No questions from required readings (you are still required to read assigned readings) Questions will be from what we have covered in class
Generally the topics we covered one week before the quiz
You will have more
Prospect Theory Part II
What we can explain with the introduced value function?
Framing effects Reflection effects
What about Allais Paradox (common ratio, and common consequence effects)
Recall the common ratio effect example:
Prospect Theory Part III
Click to edit Master subtitle style
Savings and Consumption:
According to life-cycle/permanent income hypothesis,
Consumption should not respond to predictable movements in income.
Shea (1995) considers groups of workers w
Social Preferences II
The Fehr-Schmidt (1999)
In the literature, there is evidence for
fairness, selfishness, and cooperation motives
Is it possible to explain all these different findings in a single model?
If there are people who are motivated by fa
You should be able to tell the players, strategies of the players and the payoffs for a given game. You should be able to find the NE(s) of a given game.
Examples: PD, UG, DG, TG, PG and so on.
Quiz #10, March 31th
Real world examples against pure self
Due April 21th in class. Late submissions will NOT be accepted!
Term Paper (20%)
5 pages typed in 12 point font, double spacing, including appendix 1" margin from each side
What should you write about?
What is the main research question?