Pictures

Question 1

what is the graph showing risk aversion

Answer 1

utility from certainty of 50 is greater than gamble of 50% 0 50% 100. Green line is certainty, risk averse

Question 2

What is the graph in prospect theory that shows risk aversion

Answer 2

concave in gains, convex in losses. From π(p). Origin is the reference point

Question 3

What does the weighting function look like from prospect theory

Answer 3

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

Question 4

What is diminishing sensitivity in terms of utility in prospect theory

Answer 4

diminishing returns for gains and losses

Question 5

What is diminishing sensitivity in terms of probability

Answer 5

However from the two reference points of 0 and 1

Question 6

Equation for a person’s Intertemporal Utility Function

Answer 6

Question 7

What is the quasi hyperbolic discount factor

Answer 7

Question 8

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

Answer 8

over inference about ability of manager

Question 9

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

Answer 9

Question 10

Describe and explain the simple model of projection bias

Answer 10

Question 11

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

Answer 11

Question 12

What are the main findings for the clothes ordering experiment

Answer 12

Conlin et al. (2007)

Question 13

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

Answer 13

Question 14

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

Answer 14

Question 15

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

Answer 15

Question 16

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

Answer 16

Question 17

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

Answer 17

Question 18

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

Answer 18

Question 19

Draw the graph of value against perceived value for the used car experiment (theoretical model not actual data)

Answer 19

V^=K-αm^, with m^=floor(m,10000) + (1-θ)mod(m,10000)

Question 20

What paper is picture from

Answer 20

Kahneman and Deaton, 2010

Question 21

What are the takeaways from picture

Answer 21

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

Question 22

What is picture showing

Answer 22

Happiness related to age

Question 23

Explain picture

Answer 23

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

Question 24

What does picture show

Answer 24

Relationship between real GDP and life satisfaction

Question 25

What does picture show

Answer 25

Despite doubling of GDP, happiness still flat. Contradicts link between GDP and happiness

Question 26

What is equation for individual utility taking into account reference income (Happiness)

Answer 26

Question 27

Draw the relationship between income and happiness at the individual and aggregate level

Answer 27

You still take into account the income of those around you, if you are less then you get less utility from it

Question 28

Explain picture and what paper is it from

Answer 28

Proto and Rustichini (2015). First part is neoclassical relationship. Behavioural world after 35/40, takes into account what you have compared to what you want to have

Question 29

Given picture what is the effect of a short-run increase

Answer 29

Short term increase larger because y\*t hasn’t adjusted yet

Question 30

derive the first expression into rational and irrational bits

Answer 30

Front-parietal is rational. Limbic is irrational present bias

Question 31

What are the two objective functions that are maximised for the deliberative and affective systems (initial mnodel) and what paper

Answer 31

Loewenstein et al. (2015)

Question 32

in Loewenstein et al. (2015) what determines which system is given the most weight when making decisions given picture

Answer 32

Question 33

In Loewenstein et al. (2015) what is the effort costs

Answer 33

The larger the conflict between heart and head, the higher the costs

Question 34

What is the equation for the deliberative system subject to constraints for Loewenstein et al. (2015)

Answer 34

Question 35

What does the deliberative system look like for intertemporal choice from Loewenstein et al. (2015)

Answer 35

Question 36

What does the affective system look like for intertemporal choice from Loewenstein et al. (2015)

Answer 36

Question 37

How is the deliberative and affective systems from Loewenstein et al. (2015) affected when looking at risky decisions

Answer 37

Question 38

How is the value function (v(xi, a)) from picture affected with loss aversion

Answer 38

Question 39

What does the equation for the deliberative system s.t. constraints look like if it is a risky decision and loss aversion is taken into account, given picture (from Loewenstein et al. (2015))

Answer 39

Question 40

What are some predictions from the equation of deliberative system with constraints given picture

Answer 40

Question 41

How does the deliberative and affective system change when taking into account social preferences

Answer 41

Question 42

What is the overall equation for the decision of deliberative system s.t. constraints when taking into account social preferences

Answer 42

φ: stable weight of other person's payoff (unrelated to feelings), Variable weight a: affective motivation, context-dependent

Question 43

What are the predictions taking into account social preferences input given picture

Answer 43

Question 44

What is the equation for the paper on domestic abuse

Answer 44

Card and Dahl (2011)

Question 45

what is the decision of the deliberative system subject to constraints for the intertemporal choice model

Answer 45