Behavioral Economics Notes

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Interesting concepts

• Anchors
• Arbitrary Coherence
• Attraction of zero
• Relativity and Choice

 

Relativity and Choice

 

When presented with two choices with non-comparable qualities, e.g. A and B, the majority will choose A if an option like A but slightly worse (A-) is present, and the majority will choose B if an option like B but slight worse (B-) is present.

 

 

Arbitrary Coherence

 

• Having people write down the last two digits of their social security number, and which of a number of items they'd be willing to buy for that much in dollars, has a large effect on prices given when you follow by simply asking what is the most they'd pay for each item. (Ariely blog)