Motivation
Salience theory
Example Application
EC2030 Section 3: EUT, Critiques, Alternatives
(Part II)
Supplementary material to Andreis lecture
TF: Annie Liang
October 4, 2013
Misperceptions of probability
Motivation
Motivation
Salience theory
Example A
Reference-dependent Utility
KR framework
EC2030 Section 4:
EUT, Critiques, Alternatives (Part III)
TF: Annie Liang
October 4, 2013
Misperceptions of probability
An example
Reference-dependent Utility
Reference-dependent Utility
KR framework
An example
Mis
Rabin Calibration Theorem
TF: Annie Liang
October 25, 2013
Rabin Calibration Theorem
Motivation
I
Under Expected Utility Theory,
risk aversion concave utility over wealth
I
I
Basic intuition: a dollar that helps us avoid poverty is more
valuable than a do
2030 Problem Set 2 Solutions
Due Date: October 16, 2013 (in class)
Problem 1: Salience
Consider a risk-neutral local thinker faced with a choice between a lottery L = (x1 , p; x2 , 1 p) and a
sure prospect S = (y, 1). All payoffs are positive and x1 > x2
Expected Utility Theory
Local Thinking
EC2030 Section 2: EUT, Critiques, Alternatives
(Part I)
Supplementary material to Andreis lecture
TF: Annie Liang
October 4, 2013
Misperceptions of probability
Expected Utility Theory
Expected Utility Theory
Local Th
2030 Problem Set 3
Due Date: December 4, 2013 (in class)
Problem 1
In this problem, we discuss the behavioral hazard model from Baicker, Mullainathan, and Schwartzstein
2013):Behavioral Hazard in Health Insurance.
The individuals problem. David and Sendhi
2030 Problem Set 2
Due Date: October 16, 2013 (in class)
Problem 1: Salience
Consider a risk-neutral local thinker faced with a choice between a lottery L = (x1 , p; x2 , 1 p) and a
sure prospect S = (y, 1). All payoffs are positive and x1 > x2 . Denote b
Problem Set 3 Solutions
Economics 2030
Problem 1: Behavioural hazard in health insurance
Solution by Jann Spiess.
The individuals problem. David and Sendhil both get a headache at t = 1 of severity s.
Assume that there is a treatment available which provi
Logistics
Games with hyperbolic agents
Dynamic inconsistency
EC2030 Section 1: Hyperbolic Discounting
Supplementary material to Davids lecture
TF: Annie Liang
September 14, 2013
Annie Liang
Hyperbolic discounting
Logistics
Games with hyperbolic agents
Dyn
Ec 2030 Problem Set 1 Solutions
Original solutions by Dan Benjamin
Revised by James Burns Nov 2008
Problem 1 (When should I do a project?):
a. Consider a quasi-hyperbolic naive with =
indexed by the whole numbers, t cfw_0, 1, 2, ..
1
2
and = 1. Time is
T