...Expected Value and Consumer Choices Name Institution Mental accounting and how it impact on consumer decision making Mental accounting can be described to be, a combination of cognitive operations that various individuals as well as households use in evaluating, and organizing their financial activities (Okada, 2001). Mental accounting can also be explained to be, some form of accounting mind set which people form psychologically so as to benefit from the costs, which are associated with the choices that they make. Mental accounting is therefore meant to help individuals in checking their financial undertakings, as well as controlling their consumption. Researchers have said that consumers have mental accounts in every economic situation that they may find themselves in, and this usually influence the decisions that the consumers make. In every decision that a consumer makes about purchasing any commodity, two things must be put into consideration that is the cost of the commodity, as well as its benefit. In this regard, mental accounting means that the cost of a commodity is viewed subjectively, and is usually linked directly to the use of the commodity (Thaler, 2008). Therefore, mental accounting makes the consumer to allocate certain budgets to various categories of commodities; this may subsequently affect the spending behavior of the consumer. In addition, due to this subjectivity, consumers tend to give similar amount of money varying weight. This therefore shows...
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...Expected Value and Consumer Choices Argosy University Abstract Consumers’ choices are prey to subtle discrepancies that arise in cognitive accounting and identifying how and when you are susceptible is an important step in improving the decision making process (Tvorik, 2014). This paper will consider why people value gains and losses differently in different circumstances by addressing what mental accounting is and how it impacts consumer decision making; and how a company can take advantage of their consumers’ mental accounting (Tvorik, 2014). This writer will also consider different scenarios from differing points of view; as a marketer and as a consumer. As a marketer, this writer will analyze how I would frame certain decisions to benefit from the disparities in my own cognitive accounting. As a consumer, I will address how to avoid the pitfalls posed by the inequalities of again, my own cognitive accounting (Tvorik, 2014). Mental accounting is a term that describes how people categorize and quantify economic outcomes (Thaler, 1980). This is similar to financial accounting in the way of using a system of debits and credits and affects how people spend and save their money, thus consumer decision-making. Mental accounting determines “when an individual chooses to act or postpone a purchase, how he or she perceives gains and losses, and how timing bears on the individual’s choices” in relation to the three mental buckets: current income, current wealth and future...
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...Economist Richard Thaler developed the concept known as mental accounting which contends that individuals divide their current and future assets into separate, non-transferable portions. By subscribing to this theory, individuals assign different levels of utility to each asset group, which affects their consumption decisions and other behaviors. The importance of this theory is illustrated in its application towards the economic behavior of individuals, and thus entire populations and markets. Rather than rationally viewing every dollar as identical, mental accounting helps explain why many investors designate some of their dollars as "safety" capital which they invest in low-risk investments, while at the same time treating their "risk capital" quite differently. (Investopedia) Money is fungible, meaning that it is all the same. When budgets are not fungible, their existence can influence consumption in various ways. Frequently, retailers take advantage of consumers’ mental accounting by utilizing the principle of segregate gains which allows a sellers multi-dimensional product to be evaluated separately. In addition, several bonus items are included. One example of the segregate gains principle that comes to mind for me is the Montel Williams’ juicer called the Healthmaster. The product was advertised on television and included the following benefits: one year subscription to company for recipes (for an additional fee), payment over three months for the product...
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...this framework, the standards are viewed as defining a function, m, from H into the real line such that m(8) m(77') That is, the standards if and only if 77R77'. are used to single out a most preferred alternative. Using the standards, we are able to compare any two accounting alternatives and decide which of the two is superior or whether they are equally desirable. Presumably, the comparisons are also transitive. One way of describing such a choice process, which we adopt, is to view the standards as providing a hypothetical numerical ranking for each of the alternatives. Note, however, that the domain of this ranking function is limited to E itself, without any reference to the individual's preferences and beliefs. A fundamental question now arises: does any such function, m(.), exist? In selected settings the answer is, no doubt, affirmative. But, in general, the answer is negative. This is discussed below. THE IMPOSSIBILITY RESULT max A E(U I y, 7, ay*)D(y | X7EXc YEY (2) (2) Observe that this characterization of the choice, or specification, of an accounting alternative is but an expected utility variant of the situation initially discussed. We provide for comparison of any pair of alternatives; and our comparisons are transitive. We place these comparisons in an expected utility format simply because it is convenient. Reliance on standards to specify the most preferred accounting alternative follows a somewhat different tack. The purpose is to select the preferred...
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...The Economics of Amartya Sen “Social Choice and Welfare Economics” (NPWES, 2008) And as related to Philippine Economy: National Budget Cycle In Partial Fulfillment of the Requirements for the Degree Bachelor of Science in Hotel and Restaurant By: Binalingbing, Jhan Ray N. February 2014 INTRODUCTION “…a budget is a useful tool to help ensure that what limited money is available will be spent for the family’s most important needs, like food, clothing and shelter.” -Florencio Abad Secretary, Department of Budget and Management Every household knows that their budget is indispensable, important and has the capability to turn and mobilize their life around. Every day, millions of Filipinos work just for a meager share to eat, drink, and live, and tomorrow, work again to live for a day. Yet reality, tells us that many still suffer and live in difficult conditions. The National Statistics Coordination Board (NCSB) reported that in 2012, 4.2 million Filipino families experienced or lived in poverty or that is 19.2% percent. The same report also stated that a family of five needed a budget of PhP 5,513 to meet basic food needs every month and Php 7,890 to stay above the poverty threshold (basic food and non-food needs) every month. Such can be attributed to the inflation rise to 4.1 % from the year 2009-2012. What could have caused this statistic to be constant and rise up even more? Is there lack in financial stewardship and accountability on the part of Filipinos? Or even...
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...7/7/2014 Evernote Export Modern Welfare Criteria Created: 5/22/2012 9:12 PM General Equilibrium and Perfect Competition General Equilibrium of Exchange and Consumption 1. We assume that there is no production and the economy is a pure exchange economy. There are 2 individuals and 2 goods, who will exhaust the goods together. Naturally they will consume until (MRS x,y )A = (MRS x,y )B. But we don't know beforehand what will be the exact equilibrium. But if we know the initial distribution, we can define the boundary within which the equilibrium solution will lie. 2. Thus the initial distribution of goods and their relative bargaining strengths will determine the equilibrium position. This general equilibrium determines not only the final distribution of goods but also the rates of exchange or relative prices. Note that however, we can't determine absolute prices from here, we can only determine relative prices. Show that in PC, General Equilibrium can exist 1. This ca be shown using the fact that under PC, relative prices which A is facing will be same as relative prices which B is facing and hence MRS x,y for both will be same. General Equilibrium of Production 1. We assume that all labor is homogenous, receives equal wages, total quantity of each factor (L and K) is fixed, the production function is continuous and twice differentiable and the technology is given which together with factor endowments limits the production possibilities. Naturally the equilibrium condition...
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...and spending of leisure time. According to Utilitarian’s, such as Jeremy Bentham (1748–1832) and John Stuart Mill (1806–1873), theory “Society should aim to maximize the total utility of individuals, aiming for "the greatest happiness for the greatest number of people". Another theory forwarded by John Rawls (1921–2002) would have society maximize the utility of those with the lowest utility, raising them up to create a more equitable distribution across society. Utility is usually applied by economists in such constructs as the indifference curve, which plot the combination of commodities that an individual or a society would accept to maintain at given level of satisfaction. Individual utility and social utility can be construed as the value of a utility function and a social welfare function respectively. When coupled with production or commodity constraints, under some assumptions, these functions can be used to analyze Pareto efficiency, such as illustrated by Edgeworth boxes in contract curves. Such efficiency is a central concept in welfare economics.In finance, utility is applied to generate an individual's price for an asset called the indifference price. Utility functions are also related to risk measures, with the most common example being...
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...ZEID BSA 1-A NSTP: CWTS REACTION PAPER The National Service Training Program, also referred to by the acronym NSTP, is a civic administration and defense preparedness program for Filipino tertiary education students. It is instituted by the Government of the Philippines on January 23, 2002 by virtue of Republic Act 9163, otherwise known as the "National Service Training Program (NSTP) Act of 2001". And one of the coverage of the program is the Civic Welfare Training Service (CWTS). This program component is designed to provide students with activities contributory to the general welfare and betterment of life of the members of the community especially those developed to improve social welfare services. As I selected CWTS for the first and second semester, I learned a lot from this course. The activities and seminars really change my point of view. At first, I thought CWTS is only about voluntary works, like cleaning in the streets but that is not at all. The class sessions and seminars taught me how practical experiences and theoretical knowledge would come into handy in the real life. But it doesn’t stop there, because there is this program that was currently introduced to us which were tutorials on some things that serve us our practice in preparation for the future use. With the things mentioned even by slowly, I improved myself physically, mentally, spiritually and socially. This program is really helpful to the students and youth. It does not...
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...Answer no. 05 Suppose in the initial allocation the following situation prevailed: MRSAom = 4 and MRSKom = 3. Keya can offer one orange to Apu for 3 mangoes and 3 mangoes can give her the same satisfaction as before and the exchange make her better off than before, because she has 1 more mango left. This means the initial situation was not Pareto efficient. Answer no. 06 Suppose in the initial resource allocation, MRSAom = 4 and MRTom = 3. Apu can reduce mango production by 3 units and gain 1 unit of orange. He can exchange 1 orange for 3 units of mangoes and can improve his situation because he gains 1 unit of orange in the process. This again implies that the initial allocation was not Pareto efficient. Answer no. 07 We need government intervention even if the First Fundamental Theorem of welfare economics is satisfied because the initial allocation of resources can lead to a point on the grand utility possibility curve, which sustains a very unequal distribution of income and puts the economy on a lower social indifference curve. The government can change the initial allocation of resources such that the distribution of income can be made socially desirable without affecting the Pareto efficiency condition. Answer no. 08 The situation in which price becomes greater than marginal cost, as in a monopoly market, cannot be Pareto efficient because marginal valuation of the consumer for the commodity as expressed by MRS exceeds MRT and in this situation the society’s...
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...Using an organisation of your choice write a report that explains how the company seeks to deliver customer value. This report will be explaining how Tesco Plc seeks to deliver customer value, through objectives and strategies they have in place to try and deliver customer value, and also improving the relationship between them and the customer. Tesco was founded in 1919 when Jack Cohen began to sell groceries from a stall in East London. The name Tesco only became known in 1924, and the first store was open in 1929 in Burnt Oak, Edgware, North London. Now Tesco is one of the world’s largest food retailers, operating in 14 different countries worldwide, in Europe, Asia and North America. Tesco is also a leading retailer in the United Kingdom, with its headquarters in Hertfordshire and 2,715 stores nationwide, it employs almost 300,000 members of staff, and has a market share of just over 30% in the United Kingdom, this creating over 60% of the group sales and profits. Tesco’s main objectives is to increase market share, maximise sales, to grow and maintain the number one retail company in the United Kingdom, remain the market leader, create value for their customers to gain lifetime loyalty, to be an outstanding international retailer in stores and online, be a creator of highly valued brands and supporting the well-being of communities and economic issues. In order for Tesco to achieve their organisational objectives, they need to be able to determine the wants and needs...
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...Oppressive and repressive social institutions, value systems and codes of behaviour are central to the horror, science-fiction and fantasy genres. Focusing on 1-2 examples of your choice, consider how these genres mediate the ‘problem’ of the social. How significant is ideology, as well as genre theory, to your case-study? This essay will explore the ways in which the horror genre perpetuates repressive and oppressive social institutions, value systems and codes of behaviour surrounding the homosexual subject. It will be suggested that the generic conventions of horror films sustain repressive understandings of the normative order which position the homosexual subject as a threatening ‘other’. This essay will offer the opinion that it is through these representations that the horror genre produces the ideological figure of the ‘monstrous homosexual’. The discourses and ideologies explored will primarily be those relating to coding of the homosexual subject as predator and paedophile. This essay will engage with genre theory in order to demonstrate how narrative repetition in the horror genre mediates the homosexual subject as a disruption to the social order which must be eliminated in order to restore the heteronormative order. The methodology of genre theory will first be outlined, and the generic conventions of the horror film will be explored. The methodology of discourse analysis will also be employed in order to expose the ideologies at play in the case study. This essay...
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...response: Percent Value Correct Response Student Response Answer Choices a. luminosity versus mass versus weight b. apparent brightness versus interior star temperature 100.0% c. luminosity versus surface temperature of a star versus size in solar radii d. radius versus weight Score: 2.5 / 2.5 Question 2 (2.5 points) What factor caused different planets to form out of different types of material? Student response: Percent Value Correct Response Student Response Answer Choices a. The angular momentum of the forming planet. 0.0% b. The quantity of dust particles in the solar nebula. c. The variation in temperature throughout the solar nebula. d. none of the above Score: 0 / 2.5 Question 3 (2.5 points) Earth crossing asteroids are termed- Student response: Percent Value Correct Response Student Response Answer Choices 100.0% a. Apollo Asteroids b. Amor Asteroids c. Jovian asteroids d. Aten Asteroids Score: 2.5 / 2.5 Question 4 (2.5 points) Unlike the terrestrial planets, the planetismals that formed the jovian planets were made up of _________ materials. Student response: Percent Value Correct Response Student Response Answer Choices 100.0% a. icy b. extremely hot c. extremely dense d. none of the above Score: 2.5 / 2.5 Question 5 (2.5 points) What are comets made of? Student response: Percent Value Correct Response...
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...are multiple choice questions and simulations recently released by the AICPA. These questions were released by the AICPA with letter answers only. Our editorial board has provided the accompanying explanation. Please note that the AICPA generally releases questions that it does NOT intend to use again. These questions and content may or may not be representative of questions you may see on any upcoming exams. 1 2011 AICPA Newly Released Questions – Financial 1. Fenn Museum, a nongovernmental not-for-profit organization, had the following balances in its statement of functional expenses: Education Fundraising Management and general Research $300,000 250,000 200,000 50,000 What amount should Fenn report as expenses for support services? a. b. c. d. $350,000 $450,000 $500,000 $800,000 Solution: Choice "b" is correct. The expenses of not for profit organizations are typically classified within generic functions as either program or support services. Program services relate to the mission or service delivery objectives of the organization, while support services relate to costs that indirectly support the organization's mission such as general and administrative costs, fund raising, membership development, etc. Of the four expenses listed in the fact pattern, two are clearly support services as follows: Fundraising Management and general Total $250,000 200,000 $450,000 Education and Research expenses are likely program services of the Fen Museum Choice "a" is incorrect...
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...(2012) 424–427 Contents lists available at SciVerse ScienceDirect Behavioural Processes journal homepage: www.elsevier.com/locate/behavproc Short report Discounting the freedom to choose: Implications for the paradox of choice Derek D. Reed ∗ , Brent A. Kaplan, Adam T. Brewer University of Kansas, United States a r t i c l e i n f o a b s t r a c t Organisms prefer to make their own choices. However, emerging research from behavioral decision making sciences has demonstrated that there are boundaries to the preference for choice. Specifically, many decision makers find an extensive array of choice options to be aversive, often leading to negative emotional states and poor behavioral outcomes. This study examined the degree to which human participants discounted hypothetical rewards that were (a) delayed, (b) probabilistic, and (c) chosen from a large array of options. The present results suggest that the “paradox of choice” effect may be explained within a discounting model for individual patterns of decision making. © 2012 Elsevier B.V. All rights reserved. Article history: Received 5 December 2011 Received in revised form 14 February 2012 Accepted 27 March 2012 Keywords: Choice Choice overload Discounting Paradox of choice Search costs As described by Catania, “Whatever else is involved in the concept of freedom, it at least involves the availability of alternatives” (p. 89; 1975). Thus, within a behavioral framework, freedom may be loosely conceptualized...
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...involves making a statement concerning the likely value of an event or action uncertain or unknown at the time of the statement. Since the theory of probability, (inaugurated by the French mathematicians Blaise Pascal and Pierre Fermat in 1654), was developed to quantify uncertain events in terms of their likelihood of occurrence, formal prediction is now viewed as a mathematical topic involving probabilistic modeling. Indeed, the mathematician Karl Pearson said in 1907 that the fundamental problem in statistics is prediction. Prediction, however, is usually not an end goal itself, but rather means to put probabilistic bounds on the relative frequency or likelihood of occurrence of future uncertain events so that strategies or actions can be taken incorporating these predictions. Risk management needs predictive analysis, as does economic regulation, engineering control, and marketing effectiveness. This latter use of prediction often involves predicting an individual’s choice (or group’s choice) or preference over alterative options. Preference can be conceptualized as an individual’s (or group’s) attitude concerning a set of objects, and is usually formulated within a choice making context (i.e., X is preferred to Y if one would choose X over Y). In this way choice and preference are linked, and predicting preferences is akin to predicting choices. An auxiliary question is to formulate models that explain “why” or “how” the choices or preferences are formed or exhibited. Applications...
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