Economics

 Nov 23rd
 The law of diminishing mar utility
Based on the law of diminishing mar. utility, the extra satisfaction the
consumer get is diminishing with each extra unit. And as the
consumer think the utility is no longer deserving the price, they will
stop buying until the price lower and fits the satisfaction they get.
 The law of demand
P down Q rise ---- point along the curve
P rise Q rise ---- shift of curve
 Nov 26th
 Consumer rationality----completeness assumption
The consumer can always rank goods according to preferences
A or B or Both
 Consumer rationality----transitivity assumption
If a consumer prefers A to B, and B to C, then she must prefer A to C
 Consumer rationality----non satiation assumption
The consumer will always prefer more of a good to less.
 Principles of behavioral economics
People try to choose the best feasible option, but they sometimes
don’t succeed.
Although we mostly care about our own material payoffs, we also
care about the actions, intentions, and payoffs of others
People care (in part) about how their circumstances compare to
reference points.
People have self-control problems.
 How humans think: two cognitive systems
Automatic System:
1. Uncontrolled
2. Effortless
3. Associative
4. Fast
5. Unconscious
6. Skilled
Reflective System
1. Controlled
2. Effortful
3. Deductive
4. Slow
5. Self-aware
6. Rule-following
 Cognitive Bias---- systematic errors in thinking