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13 Cards in this Set
- Front
- Back
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Prospect theory |
Magnitudes change considering totals losses outweigh gains diminishing value differences |
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Endowment effect |
Ownership leads to higher perceived value due to attachment -change reference points when learning new information -readjust wealth to include new information |
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Jcp effect |
Works b/c 1) higher psychological value for 20 rather than 15 2) sale percent in original price together show the loss of the person making you feel like you save more |
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That's not all effect |
Add ons increase psychological value and adjust the reference point |
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Probability weigting |
High probability underweighted waited low probabilities overweighted |
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Probability effect |
Too much weight on low probabilities quantitative shift from impossible to slightly possible |
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Delay discounting |
Value decreases over time with a slowing rate of loss |
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Save more later program |
Gains and losses have a psychologically less value in the future don't adjust baseline to include commitment |
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Magnitude effect |
Discount rates decrease as magnitude of outcome increases |
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Commodity effect |
Different discount rates for differing commodity types |
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Social discounting |
Psychological value decreases with more social distance, think more rational about others |
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Why does preference outcome change as magnitude changes? |
losses are more heavily weighted (prospect theory) -expected value of gambles are always more then certain value |
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Utility between present self and future and past selves |
1) Attach emotions to future and present choices 2) commitment strategies 3) bundling |
