Geschreven samenvatting van les 4, Consumer Behaviour (Prof De Langhe). Alle informatie van de les, slides, grafieken...
Perfect voor de wekelijkse testen!
Samenvattingen van les 5, les 6, les 7.... ook te vinden onder mijn naam.
Written summary of session 4, Consumer Behaviour (Prof De Lang...
Session 4 (Oct 20): The (in)stability of preferences – part 2
Questions about previous lectures:
Principle of consistency = to persuade other people, people want to strive from certain
consistency: if you do something in one setting, you want to do the same in another setting
ex. at work: foot-in-the-door technique!
= You ask people something small, and afterwards you ask something larger
→ they are more likely to also comply with your second request for this principle of
consistency
Related to consistency → time preferences:
“Hey, can you help me NOW with this data set?” → much more likely to say no
“Hey, can you help me NEXT WEEK with this data set?” → much more likely to say yes
If you can persuade people to make a public statement about what they are going to do, they
are more likely to be consistent in the future with their public statement
ex. If your goal to lose weight is public to your friends and family, you’re more likely to exurb
behavior that is consistent with that
the endowment-effect = people will value things that they own more than things that they
do not own, if you have something you think that it is worth a lot and if you don’t have it you
think that it is worth much less
status-quo bias = people’s tendency to stick to the thing that they are already doing, people’s
aversion to make changes
ex. You inherit a stock portfolio from a family member, you hold on to those stocks but you
would never bought those stocks if you didn’t inherit it
→ related because they are explained by the LOSS AVERSION:
= people experience losses more intense than equivalent gains
- Whenever you deviate from the status-quo, things change, they are gains and losses,
people way losses more than gains… and so hence people are more likely to stick to
the thing they are already doing
, Christiaan Huygens:
Expected monetary value
Bernoulli:
If you want to make optimal decisions, you should not maximize
the expected monetary value but you should maximize UTILITY
→ the utility of your wealth is a non-linear function of your true
wealth = CONCAVE
→ diminishing margin of utility: (= afnemende gebruiksmarge)
- You should be risk averse (initial changes in your wealth
are more important than later changes)
Kahneman:
Prospect theory = very similar to expected utility theory but also very different because of 3
principles:
- Reference point:
we compare outcomes relative to a reference point and as a consequence there is
gains and losses depending on where you put the reference point
- Diminishing sensitivity to gains and losses:
very sensitive to differences in smaller gains but less sensitive to differences in larges
gains…. Consequence: risk averse for gains and risk seeking for losses
- Loss aversion:
the utility function for losses is deeper than the utility function for gains
→ They were the first to integrate these principles in a mathematical model and to
communicate this to economists and persuade them to pay attention to this if they want to
understand and influence how people make financial decisions
Taylor:
Took the principles to the real world and started to design real interventions!
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