AGEC 21700 Lecture Notes - Lecture 9: Externality, Status Quo Bias, Demand Curve
15 Sep 2016
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Document Summary
Market(aggregate) demand: the total amount of demand for a commodity by all households. : the value of one household places one a commodity increases as one household purchases the item. The value one household places on a commodity declines as other households purchases the item. Behavioral economics: a field of economics that relaxes assumptions on economic behavior by incorporating findings from related disciplines such as psychology and sociology. Bandwagon effect: individual demand is based on the number of other households consuming a commodity hot stock ponzi scheme. Availability: the effect availability of an alternative commodity has on the demand for a commodity. Reference point: the point at which a decision is made. Endowment (divestiture aversion) a commodity is valued higher if a household already has it. Anchoring: choice determined by relying on prior information. Ignoring the cost of checking baggage when purchasing an airline ticket. Paradox of choice: reducing choice can increase utility.
