Chapter 8: Behavioral Economics

Question 1

-People have stable preferences that aren’t affected by context
-People are eager and accurate calculating machines
-People are good planners who possess plenty of willpower
-People are almost entirely selfish and self-interested

Answer 1

Neoclassical Economics

Question 2

-Focusing on the mental process behind decisions
-Improving outcomes by improving decision-making

Answer 2

Behavioral Economics

Question 3

-People experience loss aversion and judge good things and bad things in relative terms

Answer 3

Prospect Theory