Homework Answers
14. A concave utility function that exhibits decreasing marginal returns is an characteristics of Risk aversion. A risk averse investor prefers dislikes risk, and therefore they prefer lower return with known risks than higher return on investment with unknown risk. An investor will be risk averse, if and only if the utility function is concave.
Answer: option C
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14. Fill in the blank: A concave utility function (one which exhibits decreasing marginal returns tic...
10. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of...
10. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of decision making? A. Inability to make choices under risk B. Obsession with infinitely improbable alternatives C. Manipulation by framing effects D. Becoming a "money pump E. Neglecting base rates 14. Fill in the blank: A concave utility function (one which exhibits decreasing marginal returns) is characteristic of A. Risk neutrality B. Risk-seeking C. Risk aversion D. Irrationality E. The endowment effect 18. The Axiom...
8. Consider the following simultaneous game (payoff pairs (a, b) indicate the payoffs to Player 1...
8. Consider the following simultaneous game (payoff pairs (a, b) indicate the payoffs to Player 1 (a) and Player 2 (b), respectively) Player 1 CİD Player 2 C| (4,3) | (5-1) What dominant strategies, if any, does Player 1 have? A. C is strongly dominant B. D is strongly dominant C. C and D are both weakly dominant D. Player 1 has no dominant strategies E. Cannot determine without additional information 10. The Axiom of Distribution of Probabilities Across Alternatives...
The Axiom of Independence prevents what pathology of decision making? o In B. Inability to make...
The Axiom of Independence prevents what pathology of decision making? o In B. Inability to make choices under risk C. Obsession with infinitely improbable alternatives D. Neglecting base rates E. Manipulation by framing effects
14. Which of the following is not part of the definition of a decision situation? A....
14. Which of the following is not part of the definition of a decision situation? A. Beliefs B. Choice Set C. Values D. Heuristics E. States of the World 15. Fill in the blank: The probability of a hypothesis after data is observed is called the probability. A. normative B. prior C. likelihood D. posterior E. independent 16. What heuristic involves considering only options which meet all of a fixed set of criteria? A. Win-Stay, Lose-Shift B. Optimization C. The...
7. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of...
7. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of decision making? A. Inability to make choices under risk B. Neglecting base rates C. Manipulation by framing effects D. Obsession with infinitely improbable alternatives E. Becoming a "money pump" The following applies to questions 8-9 below. Consider the following sequential game (note Player 1's payoffs are in the upper right cells): 5 3 0 -5 9. What dominant strategies, if any, does Player 2...
18. The Axiom of Closure prevents what pathology of decision making? A. Violation of the "sure...
18. The Axiom of Closure prevents what pathology of decision making? A. Violation of the "sure thing" principle B. Becoming a "money pump C. Inability to make choices under risk D. Obsession with infinitely improbable alternatives E. Neglecting base rates 19. Consider the following simultaneous game (payoff pairs (a, b) indicate the payoffs to Player 1 (a) and Player 2 (b), respectively) Player 1 R. Player 2 L (2,-2) (0,2) R (2,0) (0,0) What is the best response of Player...
10. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of decision making? A. Inability to make choices under risk B. Obsession with infinitely improbable alternatives C. Manipulation by framing effects D. Becoming a "money pump E. Neglecting base rates 14. Fill in the blank: A concave utility function (one which exhibits decreasing marginal returns) is characteristic of A. Risk neutrality B. Risk-seeking C. Risk aversion D. Irrationality E. The endowment effect 18. The Axiom...
8. Consider the following simultaneous game (payoff pairs (a, b) indicate the payoffs to Player 1 (a) and Player 2 (b), respectively) Player 1 CİD Player 2 C| (4,3) | (5-1) What dominant strategies, if any, does Player 1 have? A. C is strongly dominant B. D is strongly dominant C. C and D are both weakly dominant D. Player 1 has no dominant strategies E. Cannot determine without additional information 10. The Axiom of Distribution of Probabilities Across Alternatives...
The Axiom of Independence prevents what pathology of decision making? o In B. Inability to make choices under risk C. Obsession with infinitely improbable alternatives D. Neglecting base rates E. Manipulation by framing effects
14. Which of the following is not part of the definition of a decision situation? A. Beliefs B. Choice Set C. Values D. Heuristics E. States of the World 15. Fill in the blank: The probability of a hypothesis after data is observed is called the probability. A. normative B. prior C. likelihood D. posterior E. independent 16. What heuristic involves considering only options which meet all of a fixed set of criteria? A. Win-Stay, Lose-Shift B. Optimization C. The...
7. The Axiom of Distribution of Probabilities Across Alternatives (aka Frame Invariance) prevents what pathology of decision making? A. Inability to make choices under risk B. Neglecting base rates C. Manipulation by framing effects D. Obsession with infinitely improbable alternatives E. Becoming a "money pump" The following applies to questions 8-9 below. Consider the following sequential game (note Player 1's payoffs are in the upper right cells): 5 3 0 -5 9. What dominant strategies, if any, does Player 2...
18. The Axiom of Closure prevents what pathology of decision making? A. Violation of the "sure thing" principle B. Becoming a "money pump C. Inability to make choices under risk D. Obsession with infinitely improbable alternatives E. Neglecting base rates 19. Consider the following simultaneous game (payoff pairs (a, b) indicate the payoffs to Player 1 (a) and Player 2 (b), respectively) Player 1 R. Player 2 L (2,-2) (0,2) R (2,0) (0,0) What is the best response of Player...
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