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can you explain the Axioms of expected utility by The von Neumann and Morgenstern (1944)
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- why is behavioral economic beliefs better than traditional economicThe Foundations of Behavioral Economic Analysis Consider the following property of choice correspondence : Show that maximization of complete and transitive preference satisfies β-axiom. I need this ASAPWhat is loss aversion? Explain how the topic is related to behavioral economics? Give at least two examples.
- Nicolaus I Bernoulli offers his friend Pierre Rémond de Montmort a game where they need to repeatedly toss a fair ducat until they get a head for the first time. The game stops then, and they count the number n of coin tosses it took to get the desired outcome, and Montmort gets 2^n ducats. Assume that Montmort's utility function is u(w)=w^0.14. How much should Montmort pay to play this game?2 examples of behavioral economics.Explain behavioral economic belief
- Suppose an individual in the Grossman model is trying to decide what to have for dinner. His options are as below. Each dish has an effect on the level of home good Z and health H. Мeal Home good Z Нeath H Steak and eggs (A) Kale salad with broccoli (B) Entire box of cookies (C) +7 -2 -2 +5 +10 -20 Suppose the dinner's single-period utility function is U=3Z+H • If the individual is trying to maximize his single-period utility, and he can only select one item from the table (assuming he can afford any item in the table). Which meal would he choose? Please type in A, B, or C (do not enter space, punctuation, or any other symbols or words) • A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the individual's choice? What meal would be chosen now? Please type in A, B, or C (do not enter space, punctuation, or any other symbols or words) • If the individual lives in multi-period rather than single-period, would he value Z or H more in…State the implications of the weak axiom of revealed preference (WARP) for consumer choice. The following table indicates a consumer's observed choices for two goods, a1 and *2, under three sets of prices: period Pi P2 1 1 3 3 2 1 3 3 4 3 1 Do these choices satisfy WARP? Explain why or why not.Give only typing answer with explanation and conclusion
- What are the similarities and superiority of the indifference curve technique?Suppose an individual in the Grossman model is trying to decide what to have for dinner. His options are as below. Each dish has an effect on the level of home good Z and health H. Мeal Home good Z Health H Steak and eggs +7 -2 Kale salad with broccoli -2 +5 Entire box of cookies +10 -20 Suppose the dinner's single-period utility function is U=3Z+H 1. If the individual is trying to maximize his single-period utility, and he can only select one item from the table (assuming he can afford any item in the table). Which meal would he choose? Explain your answer. 2. A miracle pill is discovered that halves the negative health impact of cookies. How does this impact the individual's choice? Explain your answer. 3. If the individual lives in multi-period rather than single-period, would he value Z or H more in multi-period? Explain your answer. Paragraph I U v A •.. > lili BAdam has just purchased a new car and has to decide whether to buy insurance to cover his new car in the event of a loss. Assume that Adam knows the probability (p) of him having an accident and losing his new car. The car is valued at L and the amount of insurance to purchase for this value is X. Adam’s entire wealth after buying the car is W. Let r be unit price of insurance. Briefly explain the problem of the insurance company and show that for insurance to be actuarially fair, the premium must equal the probability of accident.