Living Economics Table of Contents Opus1 Flash Econ Ulogistics
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15. Tastes and Preferences
15.1
Advantage vs Behavior
Theory of advantage is not theory of behavior.
15.2
Unsinkable Sunk Cost
Health club usage patterns clearly show that members are emotionally attached to sunk cost even though most economists think that rational incremental decisions should only compare marginal benefit with marginal cost.
15.3
Doing It Now or Later
People who believe that they will procrastinate when faced with immediate costs and prematurely appropriate immediate rewards may counteract this tendency sometimes to their own benefits.
15.4
Life by default
Present bias and inertia lead to low enrollment in 401(k) retirement plans even though employer matching of employee contribution is quite generous.
15.5
The Evolution of Defectors and Cooperators
There is selective advantage in being always honest even when it may be disadvantageous to do so at times.
15.6
Trust and Betrayal
Aversion to human betrayal may reduce potentially beneficial exchanges.
15.7
The Origin of Predictable Behavior
Economic behavior is predictable largely because bounded rationality leads people to adopt rules of thumb which display greater regularity than does optimization.
15.8
Happiness - Absolute or Relative?
If happiness depends on one's relative wealth, one will never be absolutely happy as long as there are others who are even richer.
15.9
Statistical Victims
When identifiable victims are involved, people are willing to spend disproportionally more resources to save a few lives rather than spending the same amount to save a much larger number of statistical victims.