ECON 2023 Lecture Notes - Lecture 18: Daniel Kahneman, Marginal Utility, Prospect Theory

50 views3 pages

Document Summary

Prospect theory: neoclassical economics: consumer-choice situation only in good situations, behavioral economics: how people cope w. negative possibilities. 3 facts how people deal w. goods & bads: 1) judge good & bad things in relative term. Loss > gain (impact: prospect theory. Pay attention to : how consumers plan for & deal w. life"s ups & downs, why they often appear narrow-minded & fail to see big picture . Awarded nobel prize in economics w. powerful prospect theory. Used to given price > any increase= loss (to status quo price) . Many business change product size (instead of price) Consumer mentally xate on price (<= not fully rational) (because price= characteristic in making purchasing decisions) Evaluate situations in terms of gains & losses. (what is others get 15% up?: prospect theory: Preferences= change drastically depending on whether contextual info de nes situation gain/ loss. =can be manipulated by advertisers, lawyers, politicians etc. Framing effect= major consequences for consumer behavior.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents