Prospect theory

Question 1

Hedonic treadmill

Answer 1

people try to make themselves permanently happier by consuming more it also gets nowhere because they end up getting used to a higher level of consumption.

Question 2

Shrinking packages

Answer 2

the practice where companies reduce the size or quantity of a product while maintaining the same price.

Question 3

Framing

Answer 3

how information is presented in order to influence peoples decisions

Question 4

Anchoring & credit cards

Answer 4

cognitive bias where people rely too heavily on the first piece of information they encounter (the “anchor”) when making decisions, even if that information is irrelevant or arbitrary.

Question 5

Myopia

Answer 5

humans brains difficulty of conceptualizing the future. Our brains are good at weighing gains and losses in the present to make immediate decisions but struggle with future benefits and costs.

Question 6

Time inconsistency

Answer 6

systematically misjudge in the present what you will want in the future. This causes a disconnect between what you currently think and what you will think in the future.

Question 7

Endowment effect

Answer 7

people put more value on an item they own when it is not worth as much as they believe it is.

Question 8

Status quo bias

Answer 8

People prefer their current state of affairs even though there are other options available