« previous next »

Author Question: Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only ... (Read 32 times)

shenderson6

  • Hero Member
  • *****
  • Posts: 573
on: Jul 1, 2018
Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only weight .5 on utility earned in future periods. In period 1 she comes up with a plan, which involves taking some action that leads to a loss of C utils in period 2 but provides a benefit of B utils in period 3 . What values of B and C will lead her to behave inconsistently and not follow through on her plans?
 a. C < B < 2C.
  b. B < C.
  c. B > 2C.
  d. B < C < 2B.

Question 2

An individual has preferences consistent with standard expected utility theory. They have utility function U(x) over wealth x. Starting with initial wealth of 10,000, the person is then faced with two choice problems. The first involves a choice between (A) no gamble and (B) a gamble with an equal chance of winning 1,800 and losing 1,000 . The second choice problem, the person first has 1,000 taken away (resulting in the adjustment of the reference point). The choice is then between (C) being given back 1,000 for sure and (D) an equal chance of winning 2,800 or nothing. What can be said about the choices the person would make?
 a. The person would never choose both A and D.
  b. The person would never choose both A and C.
  c. The person would choose A and D.
  d. The person would choose A and C.


gasdhashg

  • Sr. Member
  • ****
  • Posts: 335
Reply #1 on: Jul 1, 2018
Answer to Question 1

a

Answer to Question 2

a


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

Cutaneous mucormycosis is a rare fungal infection that has been fatal in at least 29% of cases, and in as many as 83% of cases, depending on the patient's health prior to infection. It has occurred often after natural disasters such as tornados, and early treatment is essential.

Did you know?

Carbamazepine can interfere with the results of home pregnancy tests. If you are taking carbamazepine, do not try to test for pregnancy at home.

Did you know?

In 1835 it was discovered that a disease of silkworms known as muscardine could be transferred from one silkworm to another, and was caused by a fungus.

Measuring the Weight and Length of an Infant Measuring the Weight and Length of an Infant
Concentric double-pipe heat exchanger for co-current flow Concentric double-pipe heat exchanger for co-current flow
How to write a sine function when given the amplitude, period, and phase shift How to write a sine function when given the amplitude, period, and phase shift
Current Geopolitical Framework Current Geopolitical Framework
Low-molecular-weight precursors to the purine ring Low-molecular-weight precursors to the purine ring
Embryonic Period Embryonic Period
Video: Digestive chemicals - water, gastric acid, bile & bicarbonate

For a complete list of videos, visit our video library