Test #3 Flashcards
Free/Zero Cost
The illusion of free, we see free we want it, even if we won’t use it. We purchase things we wouldn’t normally do because it is FREE!! Free gives us an emotional charge!
Natural Experiments
Occuring naturally with humans, not a set up or a purposeful study. Duke Basketball tickets
The cost of Social Norms
When social norms meet market norms, there are big problems. We are happy to do things but we don’t get paid for it. Simply put, Social Norms gives you pleasure of selflessly helping someone, but Market Norms gives you monetary pleasures. But Ariely also cautions that introducing market norms into social exchanges, violates the social norms and hurts the relationships or situations.
Schwartz : Paradox of Choice
In Schwartz’s estimation, choice has made us not freer but more paralyzed, not happier but more dissatisfied.
Placebos and Price
A 10-cent pill doesn’t kill pain as well as a $2.50 pill, even when they are identical placebos, according to a provocative study by Dan Ariely, a behavioral economist at Duke University. a. He chose to focus on the role of price in the placebo phenomenon because he has experience with the procedures that might have provided an answer for the placebo effect, and price is such an important thing when purchasing medication that looking into the pricing side of it could potentially have a large impact on the findings of this phenomenon. It did for sure, this was discovered with the medications that are cheaper VS the name or list brand.
Procrastination (Ariely)
Students procrastinated on their essays. People do better with broken-up deadlines. Procrastination leads to the planning fallacy.
Planning Fallacy
The planning fallacy is a tendency to underestimate the time it will take to complete a project while knowing that similar projects have typically taken longer in the past.
Optimism Bias
generally, when you’re planning something out, you’re planning to succeed. You’re not planning to fail. Sees future is ROSY TERMS
Overconfidence Bias
the tendency we have to think we’ll do things better than we will.
Coordination Neglect
The failure to think about how hard it is to put stuff together when other people are involved. And so that can make the planning fallacy bigger and badder when there are teams of people trying to finish work on time.
Self-Binding
Basically the same thing as the Ulysses thing
Ulysses Strategy
Literally constraining ourselves (our behaviors). Ex: Credit card in the freezer, playing Duolingo so we don’t lose a streak, Flora because it charges money if you don’t flow it. Monetary penalties like taxes if you pull out of your retirement fund.
Temptation Building
Bringing together something we don’t want to do with something happy (or we like) so we make the task easier to do. (Reading on a treadmill, music while cleaning, etc.) Making our tasks more fun. Gamification
Planner
Principal, system 2, benevolent dictator, cares about the utility of all doers, altruistic, rewards/penalties, rules to limit options. They CARE. Mom is a planner. Think about it in terms of paychecks.
Principal Agent Model
“Can’t do all the work, so we hire agents but they don’t know!” This is Thaler’s justification of the Planner and the Doer. CEO hires workers to split his task load up.
