ECON 1050 Chapter 8: Economics-1 (1) (dragged) 5
17 Sep 2016
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Document Summary
Bounded will-power is the less-than-perfect willpower that prevents us from making a decision that we know, at the time of implementing the decision, we will later regret. Bounded self-interest is the limited self-interest that sometimes results in suppressing our own interests to help others. Main applications are in finance where uncertainty is the key factor and savings where future is the key factor. The endowment effect is the tendency for people to value something more highly simply because they own it. Neuroeconomics is the study of the activity of the human brain when a person makes an economic decision. Different decisions appear to activate different areas of the brain. In the pre-frontal cortex where memories are stored and data analyzed and might be deemed. In the hippocampus where memories of anxiety and fear are stored and might be deemed irrational.
