Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393623826
Author: Lee Coppock, Dirk Mateer
Publisher: W. W. Norton & Company
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Question
Chapter 17, Problem 3QFR
To determine
To explain:
The way concept of status quo bias diminishes the utility enjoyed by consumers.
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Students have asked these similar questions
Does a nudge force people to make a better choice?
What is the foot-in-the-door technique? How does selfperception theory relate to this effect?
We learned that we can use choice between a gamble over someone's best and worst outcomes and getting an outcome of interest (like getting pizza) for certain as a way to assign numeric values to utility (on a scale of 0 to 1).
Using this method, if you are indifferent between the following:
A gamble that has a 0.3 chance of your best possible outcome (and no lower chance), and a 0.7 chance of your worst possible outcome.
Getting pizza for certain.
it means that your utility for getting pizza is:
Chapter 17 Solutions
Principles of Economics (Second Edition)
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