Decision making : a behavioral economic approach / Michal Skořepa

Livre

Skořepa, Michal. Auteur

Edited by Palgrave Macmillan. Basingstoke, New York - 2011

Note continued: Expected Value Maximization. Terminology of attitudes towards risk. Utility function. Expected Utility Maximization. Marschak triangle. Selected empirical evidence. Early evidence. Recent evidence: "Fourfold Pattern". Cumulative Prospect Theory. Value function, losses, gains. Formal apparatus of Cumulative Prospect Theory. Explanation of the evidence: fourfold pattern. Cumulative Prospect Theory's evaluation of the four types of actions. Explanation provided by value function. Explanation provided by probability transformation. The dominant explanatory role of probability transformation. Numerical example. Explanation of the evidence: common consequence effect. Phenomena that Cumulative Prospect Theory cannot explain. Competing models. The case of ambiguity. Summary. Review questions. Exercises. Hints to review questions. Hints to exercises. 13.Comparing II. Multiple Periods. Concepts and notation. Expressing location of outcomes in the future. Independent Additively Separable Intertemporal Utility Maximization. Two basic types of weighting of future periods. Discount factor, discount rate. Reasons for time discounting. Do people discount the future?. Exponential discounting. Time consistency. Empirical evidence: time inconsistency. Casual versus scientific observations of time inconsistency. Fighting time inconsistency: commitment. Commitment through restraint. Commitment through punishment. Internal commitment. Willpower. Policy implications concerning commitment. Explanation of the evidence. Growing discount factors. Further evidence. "Discounting in Denmark". Quasi-hyperbolic Discounting. Economic applications of Quasi-hyperbolic Discounting. Hyperbolic Discounting. Summary. Review questions. Hints to review questions.

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