1.What are the two types of utility a consumer might get from a transaction? Briefly explain each one.|
2.Assume you are a researcher observing a trust game.The trustor (I) has $10 as initial investment. Whatever amount (I) decides to send to trustee(T),will be multiplied by 3. (T) in turn will decide to send whatever amount back to (I). In most studies (I) sends almost half of the $10 while (T) sends back a third of the amount received.
What if the initial investment is $500,000.How does this change the decisions made by both players? What's the likely effects of larger amounts on trust? Which of the two models (neoclassical vs behavioral) can explain this situation better?
3. Neoclassical economists and behavioral economists do not see "sunk cost" eye to eye. Will the sunk cost lead to more consumption? or to less consumption? Explain the difference between the two models.
1.What are the two types of utility a consumer might get from a transaction? Briefly explain each one.|
2.Assume you are a researcher observing a trust game.The trustor (I) has $10 as initial investment. Whatever amount (I) decides to send to trustee(T),will be multiplied by 3. (T) in turn will decide to send whatever amount back to (I). In most studies (I) sends almost half of the $10 while (T) sends back a third of the amount received.
What if the initial investment is $500,000.How does this change the decisions made by both players? What's the likely effects of larger amounts on trust? Which of the two models (neoclassical vs behavioral) can explain this situation better?
3. Neoclassical economists and behavioral economists do not see "sunk cost" eye to eye. Will the sunk cost lead to more consumption? or to less consumption? Explain the difference between the two models.
