Term
| full disclosure principle |
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Definition
| individuals must disclose even unfavorable information so that people won't think the worst. |
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Term
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Definition
| a gamble whose expected value is zero. |
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Term
| certainty equivalent value |
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Definition
| amount of money you'd have to give someone to be indifferent about taking a gamble. |
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Term
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Definition
| amount you'd be willing to pay for insurance |
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Term
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Definition
| stupid people are more likely to need insurance |
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Term
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Definition
| people taking advantage of insurance |
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Term
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Definition
| a device that commits a person to behave in a certain way in the future, like blackmail |
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Term
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Definition
| cost to determine who cooperators are |
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Term
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Definition
| the property of perception whereby the just noticeable difference in a stimulus tends to be proportioned to the value of the stimulus |
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Term
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Definition
| Arise when one could do better to go against their narrow material interests. |
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Term
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Definition
| people are tempted to defect, but then everyone can defect and make everyone worse off. |
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Term
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Definition
| the notion that it is irrational to be completely well-informed, as the costs are too high. |
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Term
| out of pocket vs. opportunity costs |
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Definition
| out of pocket costs are losses while opportunity costs are forgone gains. Because losses hurt more, people will not accept good deals |
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Term
| affective forecasting errors |
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Definition
| failure to take into account all the benefits or costs of something over time. |
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Term
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Definition
| Basing an average off of the first couple as opposed to the whole. |
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Term
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Definition
| when one trait, like physical attractiveness, effects a person's overall judgment of you. |
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Term
variable input
fixed input |
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Definition
an input that can be varied in the short run
an input that cannot be varied in the short run. |
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Term
| marginal rate of technical substitution |
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Definition
| the rate at which one input can be exchanged for another without altering the total level of output. The slope of the isoquant at a certain point is the MRTS at that point. |
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