Read the summary and the most important questions on Behavioural decision making

• First lecture

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• How do you call the model that assumes no unique role of a zero price, and generally predicts that consumers make decisions based on subtracting costs from benefits?

  Standard economic model

• How do you call the model that assumes a price reduction from cost condition to free condition does reduce costs but also boosts attractiveness of free products and therefore increases demand for free products?

  Zero economic model

• What are three characteristics of incentives according to classic economics model?

  • People maximize subjective utility
  • A financial reward increases an option's utility
  • A reward will lead to a linear increase in behavior
    

• How do you call a market that is not sensitive to monetary rewards?

  Social market

• How do you call a research method where an researcher manipulates one or more independent variables and measures their effect on one or more dependent variables while controlling for the effect of extraneous variables?

  Experiment

• What are three ways to check to be certain that results are caused by our manipulation?

  1. Include a manipulation check
  2. Beware of confounding variables
  3. Random assignment
     

• How do you call an equal chance of being assigned to one particular condition of an experiment?

  Random assignment

• Which four elements should be in an research report?

  1. Introduction
  2. Method section
  3. Results
  4. Discussion
     

• Prospect theory and intertemporal choice

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• How do you call the theory people use to maximize utility by multiplying the probability times the value and assumes that behaviour is predictable?

  Expected utility theory

• How do people really make decisions rather then using the expected utility theory?

  By prospects of future outcome compared to the reference point