Exam 8: Cognitive Limitations and Consumer Behavior

Say the day of the concert for which you had bought tickets almost a month you find yourself very ill. Since you paid almost $40 for the tickets, you are considering whether to go to the concert anyway. Rational choice theory says that you should go to the concert only if:

According to the text, one important economic application of the anchoring and adjustment bias is

According to the rational choice model which of this two events should be valued more rational consumers: i.A gift of mug valued at $10 Ii)Finding the mug you thought was lost, which cost you $10 to purchase.

My golfing friends and I were having a tough time trying to figure out whether to go on our annual summer golf outing in June or August this year.Both had their advantages.Then some non-teacher in the group wondered if September would be possible.Since that was after the start of school, the teachers in the group immediately came to a decision to go in August.Explain why the September dates suddenly made August the clear choice.

According to Kahneman and Tversky's value function, which of the following gifts provide higher total values:

The Weber-Fechner law says that just noticeable difference in a stimulus tends to be:

One person out of every 1000 is an economist and 90% of them are math oriented.If only 5 % of the population is math oriented and you pick a person at random who happens to be math oriented, it is

Which of the following is true?

If you were to behave according to the rational choice model when confronted with a loss of $25 on the same day in which you receive an unexpected gift of $25 you would

Some sports writers seem so sure that rookies of the year and MVPs will not repeat the following year.They could be relying on which of the following to make that judgment.

If Kahneman and Tversky are correct about "mental accounts", household budgeting

According to the Kahneman-Tversky value function,

Say you are at the bar trying to decide which drink to buy. The waiter informs you they have two drinks available: red wine and stout beers. Since you like red wine much more than beer, you decide to order wine. Nevertheless, as you prepare to inform the waiter your decision he tells you that they also have Pale Ale beers, and you happened to like stouts much more than pale ales. If we take into consideration the halo effect you are probably going to order:

Suppose a rational consumer faced with a choice between blue pencils and red pencils will always choose the red ones.If she is also offered a choice of green pencils then

Judgmental heuristics indicate that people are more influenced by the present than the past.Develop a critique of this suggestion in your text.

The story in the text at the beginning of this chapter about playing tennis outside even though you paid for an inside court.This story illustrates which if the following?

The Kahneman-Tversky value function is

According to the text, the procedure of "anchoring and adjustment":

When people are in financial difficulty an advisor will usually recommend establishing a budget for spending.One reason is that a budget will act to discipline behavior if people psychologically are subject to

Say one morning you are considering weather to take a taxi cab or riding the train to work. Both mediums would cost you about $4, but you have already paid in advance for the train (since you pay a flat fee at the beginning of the month). If the cab ride would take slightly less time than the train ride, and you are mostly concerned with the time it takes you to get to work, you should: