Pictures Flashcards
what is the graph showing risk aversion
utility from certainty of 50 is greater than gamble of 50% 0 50% 100. Green line is certainty, risk averse

What is the graph in prospect theory that shows risk aversion
concave in gains, convex in losses. From π(p). Origin is the reference point

What does the weighting function look like from prospect theory
Thus low probabilities are overweighted, moderate and high probabilities are underweighted and the latter effect is more pronounced than the former. People’s behaviour changes a lot more near certainty

What is diminishing sensitivity in terms of utility in prospect theory
diminishing returns for gains and losses

What is diminishing sensitivity in terms of probability
However from the two reference points of 0 and 1

Equation for a person’s Intertemporal Utility Function

What is the quasi hyperbolic discount factor

Given picture, what is the bayesian and law of small numbers probabilities that fund is Well

over inference about ability of manager

What is a more realistic case of picture, but if the investor believes the urn is replenished every 3 periods. What is bayesian and law of small numbers probabilities


Describe and explain the simple model of projection bias

What are the main predictions in the Conlin et al. 2007 clothes ordering experiment

What are the main findings for the clothes ordering experiment
Conlin et al. (2007)

what is the standard theory purchasing decision model and what paper is it from

What is the modified version of the initial purchasing decision model from Prelec and Loewenstein (1998)

What are the imputed costs at b (purchasing decision model from Prelec and Loewenstein 1998)

What is the imputed benefits at c (purchasing decision model from Prelec and Loewenstein 1998)

What is the consumption experience at b (purchasing decision model from Prelec and Loewenstein 1998)

What is the payment experience at c (purchasing decision model from Prelec and Loewenstein 1998)

Draw the graph of value against perceived value for the used car experiment (theoretical model not actual data)
V^=K-αm^, with m^=floor(m,10000) + (1-θ)mod(m,10000)

What paper is picture from

Kahneman and Deaton, 2010

What are the takeaways from picture

The more evaluative the scale is, the more reactive it is to income. The more hedonic the scale (emotion), the less reactive to income.
What is picture showing

Happiness related to age
Explain picture

Y is happiness regressed on socioeconomic variables. U shaped pattern with age (negative in linear, positive in square). Men less satisfied than female. Black less. Unemployment lot less
What does picture show

Relationship between real GDP and life satisfaction



























