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Uncertainty Effect
The uncertainty effect, also known as direct risk aversion, is a phenomenon from economics and psychology which suggests that individuals may be prone to expressing such an extreme distaste for risk that they ascribe a lower value to a risky prospect (e.g., a lottery for which outcomes and their corresponding probabilities are known) than its worst possible realization. For example, in the original work on the uncertainty effect by Uri Gneezy, John A. List, and George Wu (2006), individuals were willing to pay $38 for a $50 gift card, but were only willing to pay $28 for a lottery ticket that would yield a $50 or $100 gift card with equal probability. This effect is considered to be a violation of "internality" (i.e., the proposition that the value of a risky prospect must lie somewhere between the value of that prospect’s best and worst possible realizations) which is central to prospect theory, expected utility theory, and other models of risky choice. Additionally, it has been ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Risk Aversion (psychology)
Risk aversion is a preference for a sure outcome over a gamble with higher or equal expected value. Conversely, the rejection of a sure thing in favor of a gamble of lower or equal expected value is known as risk-seeking behavior. The psychophysics of chance induce overweighting of sure things and of improbable events, relative to events of moderate probability. Underweighting of moderate and high probabilities relative to sure things contributes to risk aversion in the realm of gains by reducing the attractiveness of positive gambles. The same effect also contributes to risk seeking in losses by attenuating the aversiveness of negative gambles. Low probabilities, however, are overweighted, which reverses the pattern described above: low probabilities enhance the value of long-shots and amplify aversion to a small chance of a severe loss. Consequently, people are often risk seeking in dealing with improbable gains and risk averse in dealing with unlikely losses. Related theories ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Economics
Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes what's viewed as basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. Individual agents may include, for example, households, firms, buyers, and sellers. Macroeconomics analyzes the economy as a system where production, consumption, saving, and investment interact, and factors affecting it: employment of the resources of labour, capital, and land, currency inflation, economic growth, and public policies that have impact on these elements. Other broad distinctions within economics include those between positive economics, describing "what is", and normative economics, advocating "what ought to be"; between economic theory and applied economics; between ratio ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Psychology
Psychology is the scientific study of mind and behavior. Psychology includes the study of conscious and unconscious phenomena, including feelings and thoughts. It is an academic discipline of immense scope, crossing the boundaries between the natural and social sciences. Psychologists seek an understanding of the emergent properties of brains, linking the discipline to neuroscience. As social scientists, psychologists aim to understand the behavior of individuals and groups.Fernald LD (2008)''Psychology: Six perspectives'' (pp.12–15). Thousand Oaks, CA: Sage Publications.Hockenbury & Hockenbury. Psychology. Worth Publishers, 2010. Ψ (''psi''), the first letter of the Greek word ''psyche'' from which the term psychology is derived (see below), is commonly associated with the science. A professional practitioner or researcher involved in the discipline is called a psychologist. Some psychologists can also be classified as behavioral or cognitive scientists. Some ps ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Uri Gneezy
Uri Hezkia Gneezy (born June 6, 1967) is the Epstein/Atkinson Endowed Chair in Behavioral Economics and Professor of Economics & Strategy at the University of California, San Diego's Rady School of Management. Education and career Gneezy studied economics at Tel Aviv University, where he obtained a BA degree and graduated with honors. He later got his MA and PhD (1997) at the CentER for Economic Research at Tilburg University in Tilburg, the Netherlands. Gneezy, who frequently contributes to the Freakonomics website, is known for designing simple, clever experiments to demonstrate behavioral phenomena that open up new research directions in behavioral economics. Examples include his work on when and how incentives work, deception, gender differences in competitiveness, and behavioral pricing. Gneezy and coauthor John A. List have published a book on the hidden motives and undiscovered economics of everyday life, titled "The Why Axis." In 2014, Gneezy cofounded Gneezy Consultin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
John A
Sir John Alexander Macdonald (January 10 or 11, 1815 – June 6, 1891) was the first prime minister of Canada, serving from 1867 to 1873 and from 1878 to 1891. The dominant figure of Canadian Confederation, he had a political career that spanned almost half a century. Macdonald was born in Scotland; when he was a boy his family immigrated to Kingston in the Province of Upper Canada (today in eastern Ontario). As a lawyer, he was involved in several high-profile cases and quickly became prominent in Kingston, which elected him in 1844 to the legislature of the Province of Canada. By 1857, he had become premier under the colony's unstable political system. In 1864, when no party proved capable of governing for long, Macdonald agreed to a proposal from his political rival, George Brown, that the parties unite in a Great Coalition to seek federation and political reform. Macdonald was the leading figure in the subsequent discussions and conferences, which resulted in th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Prospect Theory
Prospect theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics. Based on results from controlled studies, it describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the actual behavior of people. In the original formulation of the theory, the term ''prospect'' referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions. Overview Prospect theory stems from Loss aversion, where the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Expected Utility Theory
The expected utility hypothesis is a popular concept in economics that serves as a reference guide for decisions when the payoff is uncertain. The theory recommends which option rational individuals should choose in a complex situation, based on their risk appetite and preferences. The expected utility hypothesis states an agent chooses between risky prospects by comparing expected utility values (i.e. the weighted sum of adding the respective utility values of payoffs multiplied by their probabilities). The summarised formula for expected utility is U(p)=\sum u(x_k)p_k where p_k is the probability that outcome indexed by k with payoff x_k is realized, and function ''u'' expresses the utility of each respective payoff. On a graph, the curvature of u will explain the agent's risk attitude. For example, if an agent derives 0 utils from 0 apples, 2 utils from one apple, and 3 utils from two apples, their expected utility for a 50–50 gamble between zero apples and two is 0.5''u''(0 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Uri Simonsohn
Uri Simonsohn is a behavioral scientist at ESADE business school in Ramon Llull University in Barcelona, Spain, and a Senior Fellow at the Wharton School of the University of Pennsylvania. His substantive interest is in Judgment and Decision Making, and he is also a methodologist. He is originally from Chile. He earned his undergraduate degree in economics from Universidad Católica de Chile, and his PhD at Carnegie Mellon University in Social and Decision Sciences in 2003, and became a professor of Operations Management at the Wharton School where he stayed until 2017, leaving to move to ESADE Business School in Barcelona as a full professor. He has been involved in research on false-positives, p-hacking, experimental replication, and pre-registrations of research. He has contributed to identifying various cases of scientific fraud Scientific misconduct is the violation of the standard codes of scholarly conduct and ethical behavior in the publication of professional scient ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Willingness To Pay
In behavioral economics, willingness to pay (WTP) is the maximum price at or below which a consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ... will definitely buy one unit of a product.Varian, Hal R. (1992), Microeconomic Analysis, Vol. 3. New York: W.W. Norton. This corresponds to the standard economic view of a consumer reservation price. Some researchers, however, conceptualize WTP as a range. According to the constructive preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store. See also * Cost-benefit analysis * ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
George Loewenstein
George Loewenstein (born August 9, 1955) is an American educator and economist. He is the Herbert A. Simon Professor of Economics and Psychology in the Social and Decision Sciences Department at Carnegie Mellon University and director of the Center for Behavioral Decision Research. He is a leader in the fields of behavioral economics (which he is also credited with co-founding), neuroeconomics, Judgment and Decision Making. Biography He received his B.A. in economics ''magna cum laude Latin honors are a system of Latin phrases used in some colleges and universities to indicate the level of distinction with which an academic degree has been earned. The system is primarily used in the United States. It is also used in some So ...'' from Brandeis University in 1977 and Ph.D. in economics from Yale University in 1985 with thesis titled ''Expectations and Intertemporal Choice''. He taught at the Booth School of Business at the University of Chicago before taking up his p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Framing (social Sciences)
In the social sciences, framing comprises a set of concepts and theoretical perspectives on how individuals, groups, and societies organize, perceive, and communicate about reality. Framing can manifest in thought or interpersonal communication. ''Frames in thought'' consist of the mental representations, interpretations, and simplifications of reality. ''Frames in communication'' consist of the communication of frames between different actors. Framing is a key component of sociology, the study of social interaction among humans. Framing is an integral part of conveying and processing data on a daily basis. Successful framing techniques can be used to reduce the ambiguity of intangible topics by contextualizing the information in such a way that recipients can connect to what they already know. In social theory, framing is a schema of interpretation, a collection of anecdotes and stereotypes, that individuals rely on to understand and respond to events. Goffman, E. (1974) ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Prospect Theory
Prospect theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics. Based on results from controlled studies, it describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the actual behavior of people. In the original formulation of the theory, the term ''prospect'' referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions. Overview Prospect theory stems from Loss aversion, where the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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