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
What does picture show
Despite doubling of GDP, happiness still flat. Contradicts link between GDP and happiness
What is equation for individual utility taking into account reference income (Happiness)
Draw the relationship between income and happiness at the individual and aggregate level
You still take into account the income of those around you, if you are less then you get less utility from it
Explain picture and what paper is it from
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
Given picture what is the effect of a short-run increase
Short term increase larger because y*t hasn’t adjusted yet
derive the first expression into rational and irrational bits
Front-parietal is rational. Limbic is irrational present bias
What are the two objective functions that are maximised for the deliberative and affective systems (initial mnodel) and what paper
Loewenstein et al. (2015)
in Loewenstein et al. (2015) what determines which system is given the most weight when making decisions given picture
In Loewenstein et al. (2015) what is the effort costs
The larger the conflict between heart and head, the higher the costs
What is the equation for the deliberative system subject to constraints for Loewenstein et al. (2015)
What does the deliberative system look like for intertemporal choice from Loewenstein et al. (2015)
What does the affective system look like for intertemporal choice from Loewenstein et al. (2015)
How is the deliberative and affective systems from Loewenstein et al. (2015) affected when looking at risky decisions
How is the value function (v(xi, a)) from picture affected with loss aversion
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))
What are some predictions from the equation of deliberative system with constraints given picture
How does the deliberative and affective system change when taking into account social preferences
What is the overall equation for the decision of deliberative system s.t. constraints when taking into account social preferences
φ: stable weight of other person’s payoff (unrelated to feelings),
Variable weight a: affective motivation, context-dependent
What are the predictions taking into account social preferences input given picture
What is the equation for the paper on domestic abuse
Card and Dahl (2011)
what is the decision of the deliberative system subject to constraints for the intertemporal choice model
