Podcast
Questions and Answers
Which of these characteristics should a good rule of thumb have? (Select all that apply)
Which of these characteristics should a good rule of thumb have? (Select all that apply)
- Universal (correct)
- Intuitive (correct)
- Actionable (correct)
- Simple and Memorable (correct)
- Factual and Objective (correct)
A choice architecture alters people's behavior in a predictable way, but also significantly changes their economic incentives.
A choice architecture alters people's behavior in a predictable way, but also significantly changes their economic incentives.
False (B)
Which of the following is NOT a type of nudge within choice architecture?
Which of the following is NOT a type of nudge within choice architecture?
- Default choice
- Restricted choice
- Compulsory choice (correct)
- Mandated choice
Standard economics models are based on the assumption of rational self-interest.
Standard economics models are based on the assumption of rational self-interest.
What is the primary goal of a producer in standard economic models?
What is the primary goal of a producer in standard economic models?
Flashcards
Nudge
Nudge
A method to influence consumer choices without restrictions or changing incentives.
Choice Architecture
Choice Architecture
The design of the way choices are presented to people.
Default Choice
Default Choice
The option automatically selected if no action is taken.
Restricted Choice
Restricted Choice
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Consumer Rationality
Consumer Rationality
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Perfect Information
Perfect Information
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Utility Maximization
Utility Maximization
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Anchoring Bias
Anchoring Bias
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Framing
Framing
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Availability Heuristic
Availability Heuristic
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Price Elasticity of Demand (PED)
Price Elasticity of Demand (PED)
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Inelastic Demand
Inelastic Demand
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Elastic Demand
Elastic Demand
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Price Elasticity of Supply (PES)
Price Elasticity of Supply (PES)
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Niche Market
Niche Market
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Mass Market
Mass Market
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Income Elasticity of Demand (YED)
Income Elasticity of Demand (YED)
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Normal Good
Normal Good
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Inferior Good
Inferior Good
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Bounded Rationality
Bounded Rationality
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Bounded Self-Control
Bounded Self-Control
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Bounded Selfishness
Bounded Selfishness
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Study Notes
Nudge Theory
- Nudge - a method designed to influence consumer's choices in a predictable way, without offering financial incentives or imposing sanctions, and without limiting choice.
- Choice architecture - any aspect of the choice environment in a predictable way without forbidding any options that alters people for bidding their economic incentives.
- Different types of nudges within choice architecture:
- Default choice - results from doing nothing.
- Restricted choice - limited by the government.
- Mandated choice - a free choice, but it is compulsory to make.
Critique of the maximising behaviour of consumers and producers
- Standard economics models are based on the assumption of rational 'self-interest'.
- Consumers want to maximise their satisfaction.
- Producers want to maximise their profits.
- Investors want the highest possible ROI*.
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