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Terms in this set (283)

In your opinion, are people mostly rational or irrational?
People are not always thinking about the best overall benefit for all. Emotions make people irrational.
In the first video, I described a rational vs an irrational person choosing which restaurant to go to. Can you summarize the differences between the two?
Rational person would give each category a score and then choose different options and score them based on the criteria and then choose the restaurant based on that.
Who did I describe as the first behavioral economist, and why?
Adam Smith - every person acts for their own self interest. People following their own self interest is what makes other people's lives better.
What does it mean to be boundedly rational?
Instead of decision making being rational, it is more about satisfying yourself. Since you don't have enough time to get all of the information in the would, you have to end up making a sub-optimal decision. (satisficing vs. optimizing)
Can you describe the dual processing theory? (i.e., system 1 vs system 2)
System 1 (95%): automatic, quick, autopilot (buying chips)
System 2 (5%):
slow, logical (buying a house)
Can you describe to me what a heuristic is?
A simplified way to make decisions (ask others, do what they have done, or do what we have done in the past)
Am I more likely to use heuristics when buying a pen or a car?
buying a pen, since it likely matters less to that person
How would marketing be different based on whether consumers are rational or not
Would be more based on numbers and solid facts (this will help you X amount), and would have to try to convince consumers that it is the most optimal option
What is social status? How is it different in human vs non-human societies?

Use things like what we buy, the clothes we wear, the cars we drive, our education, etc. to show our status. essentially where you are in a hierarchy

monkeys do not do things like have lambos, status is much more complicated in the human world. for animals it's more about strength/speed/physical attractiveness.

How does Darwin's theory of sexual selection help understand people's spending?

Different from natural selection. Says that another force that influences us is our ability to attract mates. Our species have to be able to reproduce to survive. Peacock tails are used to attract female peacocks (peahens), used for mating. Their tail makes them slower, and easier to spot by predators.

What are some examples of how people signal their status to others?
Material possessions, education, awards, fame

What are some brands that signal status to others? How do these brands maintain this signaling quality?
Balenciaga vs. Ikea brand example. Apple is a high end brand that is accessible to most people - they do this by pricing the products people actually want at reasonable prices (Iphone) but other products are much more expensive.

Can you summarize what was included in the chapter on social status and consumption?
expect people to spend more on status in individualistic countries. in collectivistic cultures, people care more about their identity within a group but they could be influenced by status too because they care about what the group thinks about them.
MEASURE OF HOW WELL DIFFERENCES IN PEOPLE'S GENES ACCOUNT FOR DIFFERENCES IN THEIR TRAITS

Heritability is a statistical concept (represented as h²) that describes how much of the variation in a given trait can be attributed to genetic variation.

Heritability estimates range from zero to one. A heritability close to zero indicates that almost all of the variability in a trait among people is due to environmental factors, with very little influence from genetic differences.

Characteristics such as religion, language spoken, and political preference have a heritability of zero because they are not under genetic control.

A heritability close to one indicates that almost all of the variability in a trait comes from genetic differences, with very little contribution from environmental factors. Many disorders that are caused by mutations in single genes, such as phenylketonuria (PKU), have high heritability.

Heritability can be difficult to understand, so there are many misconceptions about what it can and cannot tell us about a given trait:

Heritability does not indicate what proportion of a trait is determined by genes and what proportion is determined by environment.

So, a heritability of 0.7 does not mean that a trait is 70% caused by genetic factors; it means than 70% of the variability in the trait in a population is due to genetic differences among people.

Knowing the heritability of a trait does not provide information about which genes or environmental influences are involved, or how important they are in determining the trait

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