Preference Sign Weak, Strict & Indifferencet
Rational Perfernce 1.Completeness
Condition 2. Transitivity Different perference
elicitation gets same
preference. (Violation)
While reveal well-defined preference,
Preference procedure invariance should observe.
IIA should be satisfied
(Violation)
Conditons:
Theory of
1. rational preference condition: Completeness is core
Rational Choice
2. affordable preferred bundle
Revealed Preference solution:
1. Budget Constraint
2. MC=MB
Lec2 Decoy Effect/
Preferences & Asymmetrically dominated
Attraciton Effect
Choices
Menu
Dependence Compromise Effect Result of Extremeness Aversion
NO clear preference, construct preference from
given choice. (During decision making process)
Explain
Reason-based choice
Choices are correlated with irrelevant cue
Violation
Anchring
Effect Heuristic and biases
Explain
Anchoring and adjustment
, RIsk & Uncertainty
Mutually Exclusive
vs
Independent
Conditional Probability
Probability Theory
(Normative)
Law of Total Pribability
Bayes' rule Update Belief
Lec3
Probability
Judgement washing out of piror Confirmation Bias is violation of thi
1.Representativenes
Explain
Gambler's 2.Law of Small Numbe
Fallacy
Base Rate People tend to neglect
Neglect Explain
Base Rate Informa
Violation
of Probability
Theory Biased search for information
Confirmation
Biased interpretation
Bias
Biased memory
Availability
Heuristic
Overestimation
Overconfidence Overplacement
Overprecision
Rational Perfernce 1.Completeness
Condition 2. Transitivity Different perference
elicitation gets same
preference. (Violation)
While reveal well-defined preference,
Preference procedure invariance should observe.
IIA should be satisfied
(Violation)
Conditons:
Theory of
1. rational preference condition: Completeness is core
Rational Choice
2. affordable preferred bundle
Revealed Preference solution:
1. Budget Constraint
2. MC=MB
Lec2 Decoy Effect/
Preferences & Asymmetrically dominated
Attraciton Effect
Choices
Menu
Dependence Compromise Effect Result of Extremeness Aversion
NO clear preference, construct preference from
given choice. (During decision making process)
Explain
Reason-based choice
Choices are correlated with irrelevant cue
Violation
Anchring
Effect Heuristic and biases
Explain
Anchoring and adjustment
, RIsk & Uncertainty
Mutually Exclusive
vs
Independent
Conditional Probability
Probability Theory
(Normative)
Law of Total Pribability
Bayes' rule Update Belief
Lec3
Probability
Judgement washing out of piror Confirmation Bias is violation of thi
1.Representativenes
Explain
Gambler's 2.Law of Small Numbe
Fallacy
Base Rate People tend to neglect
Neglect Explain
Base Rate Informa
Violation
of Probability
Theory Biased search for information
Confirmation
Biased interpretation
Bias
Biased memory
Availability
Heuristic
Overestimation
Overconfidence Overplacement
Overprecision
