Behavioral Economics Quiz 1 – Flashcards
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a full specification of the rules of trade
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Market Institution
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Asymmetrical, with one side posting and the other responding
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Posted-Offer Auction
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The percentage of the input work that is converted to output work
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Efficiency
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A condition in which people receive from a relationship in proportion to what they give to it.
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Equity
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tendency to favor one's own group over other groups
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In-Group Bias
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A system in which buyers enter competitive bidders and sellers enter competitive offers simultaneously, as opposed to the over-the-counter market, where trades are negotiated. Examples are the NYSE and the AMEX
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Double Auction
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a market where subjects walked around and bargained for prices on a particular product. Transactions were revealed on a board. This experiment was used to refute the competitive model.
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Pit Market
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When trades can only be placed during a specific time period; Very liquid when in session because all traders are present but illiquid between sessions; All trades, bids, ands asks are declare
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Call Market
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the study of how people behave in strategic situations
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Game Theory
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A game in which a proposer is given a sum of money and makes an offer to a responder as to how this money should be split between them. The responder must choose to accept the offer or reject it. This game has been used to study people's decision-making strategies.
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Ultimatum Game
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Behavior that recognizes mutual interdependence and takes account of the expected behavior of others.
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Strategic Behavior
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increase the fitness of the individual performing the behavior but decrease the fitness of the recipient of the behavior.
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Selfish Behavior
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Free from bias, dishonesty, or injustice
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Fairness
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Behaviors that benefit other people and for which there is no discernable extrinsic reward, recognition, or appreciation.
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Altruism
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Dictators can set whatever split they want, the people MUST accept
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Dictator Game
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birth, education, and religion determine public opinion i.e. People are living longer today than ever before, so they can draw post-retirement benefits for longer
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Demographic Effects
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The average or central value of a set of quantities.
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mean
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Referring to the middle term or mean of the middle two terms of a series of values arranged in order of magnitude.
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median
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one player (the trustor) decides how much money to invest and a second party (the trustee) divides up the principal and earnings ex. Laney is in an experiment. The experiment gives her some money and tells her she can keep it or send any part of it to someone else. If she decides to send money to someone else, the experimenter will triple the amount. Of course, there is no guarantee that you will get anything back.
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Trust Game
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an equilibrium reached when all players choose the best strategy they can, given the choices of all other players
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Nash Equilibrium
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an outcome in which the total payoff for all of the players of a game is the most it could possibly be.
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Hicks Optimum
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an efficient situation where nobody can be made better off without making somebody else worse off
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Pareto Optimum
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A fee for early withdrawal of funds
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Penalty
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is an economictheory of racial or gender inequality based onstereotypes. According to this theory, inequality may exist and persist between demographic groups even when economic agents (consumers, workers, employers, etc.) are rational and non-prejudiced. This type of preferential treatment is labeled "statistical" because stereotypes may be based on the discriminated group's average behavior.
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Statistical Discrimination
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Behavior targeted at individuals or groups and intended to hold them apart and treat them differently.
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Discrimination
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assigning participants to experimental and control conditions by chance, thus minimizing preexisting differences between those assigned to the different groups
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Random Assignment
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An experiment set up in the real world, usually with participants who are not aware that they are in a study of any kind.
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Field Experiment
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conducted in a lab, a highly controlled environment
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Laboratory Experiment
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activities where any number of students work in groups on carefully designed guided inquiry questions
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Classroom Experiment
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a specific type of experimental method in which a pair of comparable people are observed in a specific situation to see if they fare differently
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Audit Study
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occurs when agents' personal prejudices or "tastes" against associating with members of a particular group (in a particular way) affect their treatment of those individuals
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Animus Discrimination
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Strategic situations in which a sender, with private information about his type, chooses a message to send to a receiver, who then makes choices based on her preferences, they observed signal, and her updated beliefs about the senders type.
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Signaling Game
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market equilibrium different types of people buy different types of insurance and reveal their true selves (risk adverse or not risk adverse)
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Separating Equilibrium
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Where an outcome in equilibrium is in a setting with asymmetric information and insurees choose the same type of insurance regardless of their riskiness
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Pooling Equilibrium
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the behavior where agents with the highest level of a given property invest less into proving it than individuals with a medium level of the same property.
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Counter-Signaling
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an action or reward that motivates one to act a certain way
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Incentives
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relating to a social system in which family descent and inheritance rights are traced through the mother
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Matrilineal
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relating to a social system in which family descent and inheritance rights are traced through the father
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Patrilineal
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test marketing
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Controlled Field Experiment
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gives financial incentives to clinicians for better health outcomes.
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Pay-Per-Performance
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A measure of the extent to which two factors vary together, and thus of how well either factor predicts the other.
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Correlation
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the relationship between cause and effect
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Causality
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the exponential growth in the volume, variety, and velocity of information and the development of complex, new tools to analyze and create meaning from such data
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Big Data
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motivation to join an interest group because the group works for policies that will provide members with material benefits
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Economic Incentive
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to behave in an approved way that involves offering interpersonal rewards like acceptance, inclusion, approval that quality of life can be assessed
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Social Incentive
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incentive is possible when certain beliefs are commonly held. Actions that support these beliefs make people feel better about themselves and help gain approval from society.
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Moral Incentive
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A harmful side effect of an economic situation ex. a profitable company causing pollution
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Negative Externality
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a situation when a person's actions have a beneficial impact on a bystander
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Postive Externality
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paying a person a lower wage or excluding a person from an occupation on the basis of an irrelevant characteristic such as race or gender
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Economic Discrimination
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An experiment in which nature, rather than an experimenter, manipulates an independent variable.
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Natural Experiment
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The investigator manipulates the variables along with observing them, then examines how changes in one variable affect changes in others.
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Research Experiment
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Involves making the lab look and feel more like the field situation
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Enriched Laboratory Experiment
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assumptions of parametric tests
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Independent Observations
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"tombstone courage," fatigue, bad position, bad attitude, ignoring danger signs, failure to watch hands, relaxing too soon, use of restraint devices, no/poor search, officer's inoperative weapon.
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Fatal Errors
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occurs when competing firms in an industry work together to control prices and increase profits
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Collusion
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by chance, not planned or prearranged
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Random
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Hill's criterion which states that there should be a reasonable mechanism for the independent variable to impact the dependent variable supported by existing literature
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Plausibility
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Culture pattern or trait that exists in some but not all societies.
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Generality
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Situations in which behavior in the lab may be influenced by subjects perceptions of what of what the experimenter wants or expects.
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Experimenter Demand Effects
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the maximum amount that a buyer will pay for a good
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Willingness to Pay
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Is the amount of money that a person is willing to accept to abandon a good or to put up with something negative.
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Willingness to Accept
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the difference between the bid price and the asked price
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Bid-Ask Spread
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the continuation of an activity up to the point where marginal benefits equal marginal costs MB=MC
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Optimal Decision
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A situation in which the market price has reached the level at which quantity supplied equals quantity demanded
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Equilibrium
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A special program that is the subject of an experiment.
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Treatment
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Any procedure used to evaluate the accuracy of a measurement system and, when sources of error are found, to use that information to correct or improve the measuring system
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Calibration
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In an experiment, the standard that is used for comparison
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Control
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Each subject receives only one treatment combination
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Between-Subject Design
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This design tests the same person at multiple time points and looks at changes within that person.
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Within-Subject Design
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the effects on a subject's experience with a prior condition
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Sequence Effects
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a deviation or departure from the normal or common order, form, or rule; an exception
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Anomalies
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barriers to decision making
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Psychological Biases
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The tendency to be more sensitive to actual or potential losses than to gains
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Loss Aversion
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the preference to keep things the way they are rather than change
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Status Quo Bias
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the tendency for people to inflate the value of objects, goods, or services they already own
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Endowment Effect
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one's own personal gain
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Self-Interest
