TARAS SHEVCHENKO NATIONAL UNIVERSITY OF KYIV

Faculty of Economics
Department of International Economics and Marketing

Independent Study Assignment 2

in «Behavioral economics»
Solving practice problems

Student:
4th course, 3rd group
“International Economics”
Shkiria Anastasiia
Supervisor:
Doctor of Economic Sciences
Virchenko Volodymyr

Kyiv, 2021
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TABLE OF CONTENTS
INTRODUCTION …………………………………………………………..3
CHAPTER 1. THE FIRST PRACTICAL PROBLEM………………………
4
CHAPTER 2. THE SECOND PRACTICAL PROBLEM………………...…
7
CONCLUSIONS…………………………………………………………...11
LIST OF
REFERENCES…………………………………………………...12
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INTRODUCTION
Everyone tries to maximize the satisfaction of consumption different
products and minimize negative effects. In order to analyse and solve mentioned
practical problems the Expected-Utility, Nonexcpected-Utility and Prospect
theories should be discussed. All these concepts help to deep the knowledge of
people behaviour and give an opportunity to predict some consequences by using
calculations and different axioms. EU theory was developed by Daniel Bernoulli in
1738.
The shape of the utility function helps to understand whether person is risk-
averse or risk-seeker that is crucial for predicting his/her behaviour. That is why
nowadays it is crucial to find concepts that explain why people behave in such
ways (sometimes unpredictable).
Aim of research is to solve two practical problems by answering all
questions that are given in the tasks and give the graphical interpretation of each
case with the intention to deep knowledge about consumers’ behaviour.
Objectives of the research:
1. Analyse the given literature with the intention to give formal, logical
answers that are confirmed by theories.
2. Answer all questions in the 1st practical problem by using
Nonexcpected-Utility theories.
3. Solving all tasks in the second question by calculating different
outcomes and intuitively guess the behaviour of consumers in different cases.
4. Graph figure in order to confirm all statements.
5. Make conclusions, based on the deep research and knowledge.
Object of study – is the problems in behaviour economics that can be
explained by Expected-Utility, Nonexcpected-Utility and Prospect theories.
Subject of study – practical recommendations that can be implemented to
solve mentioned practical problems.
Now let’s focus on solving each of two practical problems.