Behavioural Economics: A closer Look At Decision Making - chapter 8
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Last updated 8:14 AM on 5/8/23
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10 Terms
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time inconsistent
A(n) ________ person is neither irrational or rational.
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Time inconsistency
when people change their minds about what they want simply because of the timing of the decision.
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implicit cost of ownership
The ________ is the cognitive bias documented by behavioural economists that leads people to value things more once they possess them.
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commitment device
strategy or tool that allows people to place restrictions on later choices now so they can make better decisions in the future
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sunk costs
costs that have already been incurred and cannot be recovered or refunded
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Fungible
easily exchangeable or substitutable
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overvalue
If the benefit you get from a good is concrete and immediate, you will ________ it
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undervalue
If the benefit you get from a good is abstract and distant good, you will ________ it
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undervaluing
People are prone to ________ opportunity costs that are non-monetary
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true
(T/F) Are commodities fungible?
Flashcards (22)