Decision making by individuals and firms - Behavioural Economics - Rational but human too
8 important questions on Decision making by individuals and firms - Behavioural Economics - Rational but human too
How do we define the word rational in the context of preferences? And how can we relate it to payoffs?
however those decisions might not always mean that they will get the best possible economic payoffs
Is it ever okay to choose an option that gives you a worse of economics payoff? Why is it okay? Example: AMAZON
- Yes there are some cases when it can be rational to choose an option that gives you a worse economics payoff
- because sometimes you care about something other than the size of the economics pay off.
- an example would be amazon selling diapers for less that in produced it in order to gain market competition
What are the three reasons why people prefer economics payoff that leaves them worse off
- Concerns about fairness
- bounded rationality
- risk aversion
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I immediately started to enjoy learning again, and my grades soared. All of a sudden, everything went better. I highly recommend Study Smart to all students..
Being able to create my materials online made the process of studying so much smoother and quicker. I no longer have to spend a huge amount of my time on creating my summaries.
At first, my notes were a mess. Now I use Study Smart to take my notes in a perfectly structured way. It helps me to save a lot of time and do other things I enjoy.
Students that study with Study Smart get better grades. The system applies all the learning methods in such a way that both well-performing students and students who struggle perform much better.
Hi Chris, I would like to thank you very much. Last year I scored C on a course, and this year I got an A+ thanks to your method! Thank you very much!
The largest effect is that my child is more enthusiastic about school! Every parent wants their children to be happy at school, Study Smart made it happen.
In high school, I failed several exams, and that has really changed now. I actually needed this tool very much back then. Since I started studying with StudySmart, I haven't had any D's. My average score is now an A and those are results I would have never had in the past
With my old method, I passed only 3 out of 8 courses. Since I started taking my notes digitally in Study Smart, I have passed all my courses on the first try. For me, StudySmart takes away the stress of wondering if I will pass or not.
Thanks to StudySmart, I passed all my exams, and with better grades than before! On top of that, I have mastered a very good study method now, which I am confident will help me earn my degree.
For my 1st exam I got a C. Then, I started looking for ways to learn better and I came across Study Smart. Since then I have scored a A+, A, A- and another A. I highly recommend it to everyone who wants to hear it. I am so happy with it!!
I was struggling to finish all my first-year subjects for 3 years. Then I discovered Study Smart, which helped me to finish all of them within 3 months.
Because of StudySmart, things are going well in many ways. Before, I always had study stress and no time for anything. Now I feel calm and confident (because of the program). I used to score a B, now I usually score an A or A+.
Hey Chris, I really want to thank you very much for developing the platform, I usually got around C for my exams, now I scored an A+, an A and a A- !!
Since using Study Smart, my average has increased significantly. I even completed a statistics course with a A+ while I'm bad at statistics. I took on extra courses this year, because of Study Smart. Thanks so much!
Ever since I started studying with StudySmart I passed all my exams !!! No more re-sits!! At first, I was happy with a pass and now I only get good grades. Many thanks!
I aced all the courses I studied with Study Smart. For law, I first scored a D, and now an A! I’m 100% sure that I’ll pass all the courses I study with Study Smart.
I always thought I studied well. My grades were fine. I could never have imagined that applying these study skills would have such a huge and direct impact on my grades, my speed and the pleasure I have in learning.
For the first time, I finally feel totally confident about the way I learn. I have the perfect overview and make great progress in terms of speed and the grades I get. Thanks, Chris!
What is meant by concerns about fairness? And in what situations does it work the most?
- Concerns about fairness is the situations in which people reduce their economics payoffs in the name of fairness
- its works mostly in societal situations
What are two examples of concerns to fairness, when it come to lowering economics payoff in social situation?
- Tipping
- waiters recieving tips not because the law forces so but because they are social norms
- gift giving
- out of sympathy and in customs with social norms people bring gifts in care of another persons welfare
What do we call the concept of mental effort required to choose the option that give you the best personal economics payoff, but not quite the best?
- We call it the bounded rationality
- which means making choices that is close to but not the highest economic payoff, because the effort of finding the best payoff is too costly.
- Meaning that the decisions made by bounded rationality is the good enough method if decision making.
What are two retailer examples of Bounded rationality
- Retailers charging 2.99 one cent less in order to attract customers.
- displaying the full price of goods and services, and then showing the the discounted price?
What do we call it when you get the best possible payoff, but still refuse to make the decision, in fear of the risk? And why is it called that?
- It is called risk aversion
- because it is the willingness to scarifice some potential economics payoff in order to avoid a potential loss
- the risk makes people unf=comfortable, it is rational for them to give up some potential economics benefit in order to avoid risk
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