Differences Between NeoClassical and Cognitive Behavioral Economics
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Questions and Answers

What is the basis of Cognitive BE, according to the given text?

  • Integrating rationality into economic models
  • Market as the perfect allocative mechanism
  • Individualism and consequentialism
  • Herbert Simon's concept of bounded rationality (correct)

    • What are the two definitions of rational behavior, as per the text?

  • Adoption of means to achieve an objective and mathematical normative models
  • Substantial rationality and maximizing expected utility
  • Achievement of best possible result and selfishness
  • Procedural rationality and consistent time preferences (correct)

    • What is NET (Neoclassical Economic Theory) based on, according to the given text?

  • Selfishness
  • Maximization of Expected Utility
  • Bayesian probability operators
  • Substantial Rationality (correct)

    • Can the economic agent be rational if he takes a procedural behavior, according to the text?

    <p>Yes, even though the agent didn't try to optimize the results</p> Signup and view all the answers

    What does Satisficing behavior imply, according to the text?

    <p>Aspiration thresholds leading to explorative behavior</p> Signup and view all the answers

    What are the main assumptions of SEM (Standard Economic Models), as per the text?

    <p>Perfect rationality and Bayesian probability operators</p> Signup and view all the answers

    What is Loss aversion?

    <p>Giving more utility to losses than to gains</p> Signup and view all the answers

    What are the two anomalies that can be explained with Loss aversion?

    <p>Endowment effect and Status quo bias</p> Signup and view all the answers

    What is the Extremeness aversion?

    <p>Preferring moderate options over extreme ones</p> Signup and view all the answers

    What is the Preference reversal given the context?

    <p>A situation where preferences change based on context</p> Signup and view all the answers

    What is Assymetric dominance?

    <p>Preferring one option over another due to similarity</p> Signup and view all the answers

    What is the Similarity effect?

    <p>Preferring one option over another due to similarity to a third option</p> Signup and view all the answers

    What is Cooperative game?

    <p>A game where players cooperate for collective gains</p> Signup and view all the answers

    What is the difference in Nash Equilibrium of Prisoner's Dilemma in finitely repeated and infinitely repeated games?

    <p>In finitely repeated, defection is the only dominant strategy; in infinitely repeated, both players believe in cooperation with a small sigma probability</p> Signup and view all the answers

    What is Edgeworth model of social utility?

    <p>A model that focuses on psychological underpinnings of utility</p> Signup and view all the answers

    What is Simon’s Bounded Rationality?

    <p>A theory that emphasizes limitations on rational decision-making processes</p> Signup and view all the answers

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