1.2 individual economic decision making Flashcards

1
Q

altruism

A

the selfless and disinterested concern towards the wellbeing of others

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2
Q

anchoring bias

A

individuals tend to rely on the first piece of information they are given

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3
Q

asymmetric information

A

when one party (buyers or sellers) has more information than the other in an economic transaction

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4
Q

availability bias

A

individuals base the likeliness of future events occurring on past events

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5
Q

behavioural economics

A

branch of economics that incorporates psychological insights to understand human economic decision making

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6
Q

bounded rationality

A

individuals’ inability to make rational economic decision making due to imperfect information, time constraints and limited mental processing ability

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7
Q

bounded self control

A

individuals’ inability to make rational economic decision making due to inability to control themselves

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8
Q

choice architecture

A

a framework illustrating the effects of presenting choices in different ways

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9
Q

economic man “homo economicus”

A

a framework structuring the mind and decision making of a perfectly economic and rational human being

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10
Q

heuristics

A

rules of thumb

mental shortcuts for solving problems in a quick way

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11
Q

hyperbolic discounting

A

individuals tend to base the value of rewards on the amount of time taken to acquire the reward (longer waits, less valuable)

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12
Q

perfect information

A

both buyers and sellers have full knowledge of goods and services in a market

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13
Q

risk aversion

A

individuals tend to value losses more than commensurate gains

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14
Q

symmetric information

A

where consumers and producers have sufficient information to make rational decisions

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15
Q

utility

A

benefit/wellbeing/welfare gained from consumption of a good or service

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16
Q

utility maximisation

A

when consumers aim to make their personal welfare as high as possible