ECON 200 Lecture Notes - Lecture 23: Monty Hall Problem, Bounded Rationality, Behavioral Economics
2 Apr 2019
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What is behavioral economics: a field of economics that studies psychological influences in economic decision making. Misperceptions of probabilities: the true underlying probability is misestimated, monty hall problem, choice chosen based on probability depending on specific assumption about how the host and contestant choose their doors. Zero-risk bias: we can make the world safe too! Seeing patterns where none exist: gambler"s fallacy, belief that outcomes that have not occurred recently are more likely to occur, that"s a negative correlation, hot hand fallacy, belief that random sequences exhibit a positive correlation. Framing: would you rather have 10% chance of mortality, or a 90% chance of survival, priming, status-quo bias - opt in versus opt out, amanda needs to buy a new car for work. She has one day to find a car and was able to read only one article about new cars before she went to the dealership.
