Behavioral economics Flashcards
1
Q
Model of restricted self-control - key assumptions and implications
A
1) Hyperbolic discounting - Beta
2
Q
Anchoring effect
A
People tend to memorize arbitrary numbers that bias their future calculations and judgements. For example, even completely unjustified initial price has significant biasing effect on further valuations. Similarly past performance of investments funds influence demand for them a lot even when circumstances changed completely.
3
Q
Mental accounting
A
People tend to separate money into different mental accounts and treat them differently. The most well-known effect of that is having simultaneously credit card debt and savings.
