8. Ann can finish a project either this week or next week. The delayed rewards are 10 in either case. (The project can be done only once or not at all). Next week is busy and the cost of finishing the project are lower this week. The immediate costs are 4 this week and 6 next week. Ann has a quasi-hyperbolic utility with & = 1 and B < 1. Imagine that Ann does not finish the project this week. Then she should finish it next week (A) if ß > 0.6; (B) if ß > 0.4; (C) only if ß = 1; (D) for any ß. 9. Suppose that B = 0.5 and Ann correctly anticipates her choice next week. Then she should finish the project (A) this week; (B) next week; (C) never; (D) not enough information. 10. Suppose that ß = 0.5, and Ann can commit to finish the project next week (e.g. by imposing a heavy cost on herself if the project is not finished next week). Then she will (A) do the project this week; (B) commit to do it next week and finish it then; (C) do it next week without commitment3; (D) commit and then not finish it.

8. Ann can finish a project either this week or next week. The delayed rewards are 10 in either case. (The project can be done only once or not at all). Next week is busy and the cost of finishing the project are lower this week. The immediate costs are 4 this week and 6 next week. Ann has a quasi-hyperbolic utility with & = 1 and B < 1. Imagine that Ann does not finish the project this week. Then she should finish it next week (A) if ß > 0.6; (B) if ß > 0.4; (C) only if ß = 1; (D) for any ß. 9. Suppose that B = 0.5 and Ann correctly anticipates her choice next week. Then she should finish the project (A) this week; (B) next week; (C) never; (D) not enough information. 10. Suppose that ß = 0.5, and Ann can commit to finish the project next week (e.g. by imposing a heavy cost on herself if the project is not finished next week). Then she will (A) do the project this week; (B) commit to do it next week and finish it then; (C) do it next week without commitment3; (D) commit and then not finish it.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.3P

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