ECON 310 Lecture Notes - Lecture 2: Utility, Statistical Hypothesis Testing, Starbucks
30 Jan 2019
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The survey we completed last class had 2 separate versions. Serves 2 purposes of research: experimental manipulation, randomization (as people answer different versions) Difficult to achieve with real-life data: the same manipulation probably hasn"t happened in real life. If it has, probably not randomly: too many variables. Experiments are used a lot in behavioral economics. Prof will use the survey in the lecture to illustrate. We will think of economic phenomena as individual based and of individual behavior as goal- driven. Instantaneous utility function (what makes someone happy at a point in life: time and risk preferences (over time, beliefs, decisions. We"ll use psychological insight to improve our understanding of each of these components. [how people put all together to make a decision. ] Facts about horserace betting (thaler 1988: many races on any given day, betting on long-shots increase toward the end of the day, betting on the favorite in the last race is profitable in expectation.
