Behavioural Economics Flashcards
Premack’s Differential Probability Principle:
Less desirable activity =
More desirable activity =
We are more likely to do a less desirable activity if we know that a more….
HP behaviours will reinforce…
If a HP behaviour is made contingent on a LP behaviour, then the LP behaviour is…
Opportunity to perform HP after LP will result in…
e.g., reward a child with play after an hour of study
baseline - unconstrained access to tv watching and reading (tv watching = HP)
1hr TV access only after 1hr reading - constrained access to tv only (equal hours engaged in activity)
lower probability (LP) higher probability (HP)
desirable activity will follow it
LP ones
more likely to happen
reinforcement of LP
Microeconomics:
measures effect of price on…
A way to quantify motivation to…
consumption of a commodity
receive a reinforcer, called demand
Demand is
The amount of a commodity that will be…
The price that will be paid in order to…
consumed at a given price
maintain a given level of consumption
Demand for a commodity can be assessed by…
As price increases…
X axis –
Y axis –
plotting total consumption against a range of prices
demand decreases
price
amount purchased/consumed
Properties of a demand curve show…
Height –
Slope –
At a low price have…
The curve at the top is…
When steep…
different dimensions to our motivation to obtain a commodity
how much is consumed at a given price
how sensitive consumption is across price changes (does the reinforcer stay reinforcing with increase in price?)
a very high demand (maximum consumption)
shallow (not much drop in consumption with increasing price)
large drop in consumption with increase in price
Slide 12
Slide 12
The degree to which price increases influence consumption =
Different types:
sensitivity to price
Inelastic
Elastic
Mixed
Inelastic demand: demand for a product shows…
Examples:
Red line (straight line) - unit elasticity (increase in price by one unit, consumption decreases by one unit) Black curve (shallow) is demand curve for inelastic demand...
proportionally LESS change as the price increases
Water, Food, Shelter (rent), Transport
increase the price by one unit but the demand decreases by less than one unit
Elastic demand: demand for a product shows…
Examples:
Increase price by one unit, the demand (consumptions)…
proportionally MORE change as the price increases
Chocolate, Coke, Big Screen TV’s, Overseas travel, Movies
decreases by more than one unit – steep line
Mixed demand:
The price at which the demand curve changes from inelastic to elastic is called…
P-max is the price (x-axis) where…
a combination of inelastic and elastic demand is typical
the P-max
the demand changes from inelastic to elastic
In operant experiments subjects make responses
Number of responses =
A demand curve is produced by examining how many reinforcers are consumed at…
X axis -
Y axis -
Produce demand curves based on…
Progressive Ratio -
price the subject is willing to pay
increasing FR response requirements (Progressive Ratio)
reinforcers obtained in a session
Price per reinforcement (FR response requirement)
increasing the FR schedules, how many responses individuals make
how many reinforcers are consumed at increasing FR response requirements
A useful way to compare demand functions is to examine the FR value/unit price at which…
P-max also corresponds to the peak or the maximum…
inelastic demand changes to elastic = P-max
number of responses that will be made
Slide 20 and 21
Slide 20 and 21
How can we use P-max?
e.g., compare abuse potential of different drugs
the higher the P-max, the higher the price…
they are willing to pay
Closed economy: There is only one source…
Open economy: There are other sources…
Closed economy – inelastic demand
Live in country with no social security system, only way to secure income is work. People work a lot
Open economy – elastic demand
In NZ, several ways of getting income, can have a job or apply for benefit to secure income
of the commodity and it is only obtained by paying/working to obtain that commodity
of that resource available
Open vs. Closed economy for food:
Open - fed after the session
Closed - no post session feeding
Under an open economy, demand is likely to be….
elastic as price increases (since you have other options)
Substitutable vs. Complementary goods
Substitute: the more you consume of one…
Examples:
Access to one decreases…
Complement: the more you consume of one…
Examples:
Access to one increases…
the less you consume of the other
Butter/margarine, Patches/Cigarettes, Methadone/Heroin
demand for the other
the more you consume of the other
Marijuana/munchies, PC/Monitor, Toothpaste/toothbrush
demand for the other
Demand for petrol decreases if cheaper forms of public transport are made available
Demand for petrol increases if free parking is made available
= substitutable relationship
= complementary relationship
Slide 25
Slide 25
Many operant experiments only provide…
Applied value in assessing the effect of providing appropriate substitutes on demand
How can substitutes affect demand curves?
Because only provide one reinforcer…
Demand curves gets more elastic for the initial reinforcer because…
one reinforcer
make them more elastic, reduce P-max
substitutability is redundant
there is now a substitute
How can substitutes be applied?
e.g., nicotine-containing and de-nicotinised
reduces P-max for…
Increasing the cost of smoking will only see a….
Increase in price and provide a substitute
The substitute would make the demand for the initial reinforcer…
nicotine-containing
reduction in demand if we can get to that elastic part (P-max)
more elastic sooner
Animal Welfare:
Can’t directly communicate
Limited basic physiological measures
Providing free access means:
- Knowing what is needed already
- Consuming a lot at a low price is a poor indicator of actual need (bread vs chocolate example)
- Unlimited access may ultimately be harmful
…
Animal Welfare:
Preference measures using a Y-maze or concurrent schedule in an operant chamber
Doesn’t tell us how much something is needed, only whether something is liked more than something else
Animal Welfare: Behavioural economic approach If demand is inelastic... If demand is elastic... Can use food as a baseline, so other commodities’ demand curves can be compared to those...
then it is a need and not having it will compromise welfare
then it is a luxury and not having it will not affect welfare
of food to determine if they are essential to welfare
Animal Welfare:
Environmental requirements of pigs
Could respond to earn contact with another pig, food or opening a door to a larger space
Food > contact > door opening
Social contact elasticity similar to food – essential for welfare
…
Rats have greater demand for access to other rats…
vs. other things
