Hace Quiz 1

Front 1

What is the dominant framework for thinking about consumer welfare and choice?

Learned about in any microeconomics course?

Back 1

The Standard (neo-classical) economic model of consumer behavior.

Front 2

Name three assumptions about the Standard (neo-classical economic) model of consumer behavior.

INT

EXT

MAX CHOI

Back 2

1) People have known preferences (people have full internal knowledge)

2) People act with full information (full external knowledge)

3) People choose rationally so as to maximize utility (maximize choices)

Front 3

List 2 advantages of the standard model

Back 3

1) consumer behavior can be modeled using beautiful, internally consistent, mathematical models.

2) These models often correspond to actual behavior.

Front 4

What is the study of predictable errors? What is the study or model of predictably irrational behavior?

Back 4

Behavioral Economics

Front 5

What assumptions can we easily fix about the Standard (neo-classical economic) model if they are wrong?

Back 5

1) People have known preferences

2) People act on full information.

The first two are simple informational deficiencies.
Correct information (experimentation, education) cures the deficiency.

Front 6

Is there a solution to the third assumption if it is wrong?

Back 6

If "people choose rationally so as to maximize utility" is wrong,

There is no easy “cure” when this assumption is wrong. The model just doesn’t work in those cases.

Front 7

True or false;

Costly choice removal is contradictory to simple rational utility maximization.

Back 7

true

Front 8

If I would make rational choices in the presence of the option...

then choice removal is ....

Back 8

If I would make rational choices in the presence of the option, then paying for choice removal is an irrational act.

Front 9

If paying for choice removal is NOT an irrational act....

then ...

Back 9

If paying for choice removal is NOT an irrational act,

It is because I would NOT make rational choices in the presence of the option

Front 10

The false assumption that people always make choices in their best interest is tautological. What does that mean?

Back 10

A person's best interest is defined as whatever he chooses, therefore he always chooses what is in his best interest.

Tautological - repetition of the same sense in different words.

Front 11

What proves that people don't always make choices that maximize their utility?

Back 11

The widespread presence of costly choice removal is a specific example indicating that people often do not make rational utility-maximizing choices.

Front 12

Define the dual-self model of consumer choice.

Back 12

“Our theory proposes that many sorts of decision problems should be viewed as a game between a sequence of short-run impulsive selves and a long-run patient self.”

Fudenburg.

Front 13

Describe Fudenburg and Levin's dual self models.

Back 13

1) Long-run patient self (This side tries to maximize utility across time)

2) Short-run impulsive self (Sequential selves that exist only for a brief time. Each cares only about immediate experience)

Front 14

Short-term Impulsive

Vs

Long-term impatient

Back 14

Fudenburg and Levine

Front 15

Doer

VS

Planner

Back 15

Shefrin and Taylor

Front 16

Passions

VS.

Impartial spectator

Back 16

Adam Smith

Front 17

Affective/Visceral

VS

Deliberative

Back 17

Loewenstein

Front 18

Hot state

vs

Cold state

Back 18

Bernheim & Rangel; Loewenstein

Front 19

List the "short term" side in dual

Back 19

Short-term/impulsive

Doer


Passions

Affective/Visceral

Hot state

Front 20

Describe the Planner and Doer model by Thaler and Shefrin

Back 20

Thaler and Shefrin consider it the first systematic, formal treatment of a two-self man.

Views the individual as an organization. At any point in time, the organization consists of a planner and a doer.

There is conflict between the planner and the doer.

Front 21

What is Thaler and Sheffrin's Planner concerned with?

What is the doer concerned with

Back 21

The planner is concerned with lifetime utility…”

“the doer exists only for one period and is completely selfish or myopic.

Front 22

When did Adam Smith publish the Wealth of Nations?

Back 22

1776 published The Wealth of Nations. It is the First modern work of economics

Front 23

When did Adam Smith write The Theory of Moral sentiments and what was it about?

Back 23

In 1758 Adam Smith published The Theory of Moral Sentiments. This work provided the underpinnings to The Wealth of Nations.

Smith argued that behavior was determined by the struggle between what Smith termed the ‘passions’ and the ‘impartial spectator.

Front 24

Define Adam Smith's 'passions' what did 'passions consist of'?

Back 24

The passions included drives such as hunger and sex, emotions such as fear and anger, and motivational feeling states such as pain…”

Front 25

Define Adam Smith's 'impartial spectator'. What did the 'impartial spectator' consist of?

Back 25

“The spectator, in contrast, ‘does not feel the solicitations of our present appetites. To him the pleasure which we are to enjoy a week hence, or a year hence, is just as interesting as that which we are to enjoy this moment’ (IV, ii, 272)”

Front 26

Define the Hot and Cold State by Loewenstein.

Back 26

“hot state (i.e., craving, angry, jealous, sad, etc.)”

“the individual may enter a “hot” decision-making mode in which he always consumes the substance”


cold state (i.e., not hungry, angry, in pain, etc.”

The individual may also operate in a “cold” mode, wherein he considers all alternatives and contemplates all consequences.”

Front 27

Define the affective system

Back 27

system that encompasses emotions such as anger and fear and motivational drives such as those involving hunger and sex

Front 28

Define the deliberative system

Back 28

system that assesses options with a broad, goal-based perspective (roughly along the lines of the standard economic conception)”

Front 29

Define visceral factors

Back 29

“Visceral factors refer to a wide range of negative emotions (e.g., anger, fear), drive states (e.g., hunger, thirst, sexual desire), and feeling states (e.g., pain), that grab people's attention and motivate them to engage in specific behaviors…

Front 30

These are associated with long-term / patient behavior

Back 30

Kindness
Generosity
Serenity
Forgiveness
Thankfulness

Front 31

What system is this?

affective or deliberative?

system desires immediate gratification.

Back 31

Affective

Front 32

What system is this?

Affective or deliberative?

system considers longer-term effects on weight, appearance, and health based upon calorie content, fat, sugar, etc.

Back 32

The deliberative

Front 33

An experiment with numbers and cake was conducted by who?

Back 33

An experiment with numbers and cake Shiv & Fedorikhin (1999)

Front 34

If self control is the outcome of the conflict between the deliberative and affective systems, what happens if the deliberative system is occupied?

Back 34

People's whose deliberative systems were more occupied, chose the chocolate cake more.

Eat more if your deliberative is more occupied (have a more difficult memory task etc..)

Front 35

processes that are susceptible to impulses or temptations, or alternative?

Back 35

Automatic process

Front 36

processes which are immune to temptations?

Back 36

Control process

Front 37

Who came up with the elephant anology?

Back 37

Haidt.

“The image that I came up with … was that I was a rider on the back of an elephant. I’m holding the reins in my hands, and by pulling one way or the other I can tell the elephant to turn, to stop, or to go. I can direct things, but only when the elephant doesn’t have desires of his own. When the elephant really wants to do something, I’m no match for him.”

Front 38

Uncle benny trained what animal and what is its name?

Back 38

Casey the elephant.