Week 9 Flashcards
1
Q
Expectancy value theory
A
People maximize benefits and minimize costs
(Maximize utility). Thus, compare all the potential outcomes of actions rationally
2
Q
Prospect theory
A
- Probability is biased (Perceptive value mismatch)
- Value is biased (Risk seek for losses, risk averse for gains)
- Reference point is important
3
Q
Mental accounting meaning
A
People already account costs in their heads before even spending or appoint birthday money to treats mentally
4
Q
Coding gains and losses (Hedonic editing)
A
Integrated - Outcomes valued jointly - v(x+y)
Segregated - Outcomes valued seperately - v(x) + v(y)
5
Q
Hedonic editing principle
A
Segregate gains to maximize happiness and integrate losses to minimize pain
6
Q
Silver linings principe
A
-Lost 10, Found 50 -> INTEGRATE
-Lost 50, Found 10 -> SEGREGATE
