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![(a) Carefully comment on the picture below, which represents the value function
according to prospect theory.
ے۔
LOSSES
]
VALUE
GAINS
(b) What is the endowment effect in the Kahneman, Knetsch and Thaler (1990)
coffee mug experiment? Illustrate how they are able to explain the endow-
ment effect by assuming reference dependent preferences and loss aversion.
(c) Briefly discuss how prospect theory may account for the so called 'disposition
effect' in financial markets. [
1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Febe020d4-f6d3-4816-bece-43b62e43513a%2Fb8a59eea-48d7-4105-aae3-3811f83adde7%2Fkvyo2zc_processed.jpeg&w=3840&q=75)
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- !1. If when asked how much he or she would pay to have parcel of land set aside for a park, the person answers with a low number deliberately to influence the decision, that is an example of: Group of answer choices political bias strategic bias starting point bias information bias 2. If when asked how much he or she would pay to have parcel of land set aside for a park, the person answers with a low number because the description of the property was presented poorly, this is an example of... Group of answer choices political bias strategic bias starting point bias information biasSee attachments for question context. Question: Some people advocated the following modifiction of the auction rule. A bidder cannot bid for only one object, i.e., if at some point in time he withdraws from the bidding race for one object, he automatically withdraws the race for the other object. Every other aspect of the auction, including how prices increase over time, does not change. What should a bidder do if his valuation for the two objects are 50 and 60, respectively? Explain. Does the auction lead to an efficient allocation? Explain.
- The primary research finding from studies of the “Ultimatum Game” is that when most people make economic decisions they … (choose one) -optimize. -consider the issue of fairness. -meliorate. -apply the availability heuristic.What concept in behavioral economics refers to people's tendency to prefer avoiding losses over acquiring equivalent gains? A) Anchoring B) Loss aversion C) Overconfidence D) Herd behaviorE1
- I need the solution1) John is operating an internation business in the United Stateds of American and is focused on the limitation or short-term impact of an issue. It can be said that John has a ............. 2) The grestest good for the greatest number of persons is known as the ............... approach. 3) this theorgy states that a country's wealth was deternmined by the amount of its gold and silver holding. It is ...........?What is loss aversion? Explain how the topic is related to behavioral economics? Give at least two examples.
- What is the endowment effect? Question 7 options: The tendency of people to be willing to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it The tendency of people to be unwilling to sell a good they already own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it The tendency of people to be unwilling to sell a good they already own even if they are offered a price that is less than the price they would be willing to pay to buy the good if they didn't already own it The tendency of people to be willing to sell a good they do not own even if they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own itEconomics CHOOSE THE CORRECT ANSWER. Remember that in the equilibrium prediction of an ultimatum game, the Proposer will offer the smallest non-zero amount of money possible. First-year Commerce students were asked to play an Ultimatum game where a choice had to be made over the division of R100. Offers could only be made in R10 increments, and the results of the various offers made are reported in the table below. Amount offered by Proposer RO R10 R20 R30 R40 R50 Proportion rejected 100% 60% 50% 30% 10% 0% What is the equilibrium split of the R100 between the Proposer and the Responder? O A. Proposer: R50, Responder: R50 O B. Proposer: R10, Responder: R90 O C. Proposer: R90, Responder: R10 O D. Proposer: R60, Responder: R40 O E. Proposer: R40, Responder: R60Economics Consider the ultimatum and dictator games. a) Briefly explain the general experimental findings about how individuals play these games. How do they compare with the game theoretic predictions? b) How do social preferences explain behavior in these experiments? c) Real world experiences have an impact on experimental behavior. Explain how real world experiences could affect behavior in each of theses experiments. d) Suppose that you would like to increase the amount that is sent in these experiments. Can you think of a way to to this? e) Suppose that individuals play first a dictator game and then an ultimatum game with the roles reversed, i.e. the sender in the dictator game is the receiver in the ultimatum game. Given what you know about individuals' behavior, how do think that players will play? Explain. you