Wednesday, 9 December 2009
Week 9: Drop in session
No class this week, it’s a drop in session for student who would like to meet up with their group members and discuss their presentation. Also if they would like to see David to discuss anything in relation to the presentation in week 10 and 11, we also met up with other group members and discuss our presentation and what each other going to get done.
Week 8: Review Session
Assignment completed and posted on wiki, this week was also a review week reflected on topics that we already completed over the past five week. We talked about what we understood and what we have learnt in previous weeks and to be completed in the coming weeks. These lectures have being very interesting, and I have learnt the importance of conformity when working in groups. I found it very interested working in a group doing this assignment on wiki page this method of learning is new and interesting, it also make it easier to work bit by bit rather than large volume of information and it also make it available to other group members. It also give each other the opportunity to communicate to each other via the wiki page rather than on the phone and keep track of what each other is doing and the progress that has being made.
week 7: No formal Class
We didn’t have any class this week due to Dr David Hardman away in Boston attending a conference of the Society for Judgment and Decision Making. Our assignments were also due on this day so the group met, and put a plan in place to make sure the work was done to a high standard. However, to our surprised Dr. David announced that he was extending the deadline to week eight, due to other student encountering problems with wiki. That was good news for the group; we could relax and get things done. Our group assignment now due on the 27th of November after we given and extensions on the course work, topic that we have chosen were the Priority Heuristic: Making Choices without Trade-Offs Prospect Theory: An analysis of Decision under risk.
week 6: Neoclassical theory
This week reading focused on the endowment effect, the paper title: Neoclassical THEORY VERSUS PROSPECT THEORY: EVIDENCE FROM THE MARKETPLACE, BY JOHN A LIST.
My understanding of the reading suggests behaviour does change as market experience is accumulating. There have been several experimental studies that suggested people tend to make decisions based on a higher value to things that they earned. In this paper several experiment has being carried out to explore whether the preference between two goods are independent of the consumer entitlement typical reports endowment effects for everyday consumable goods. The first experiment was carried out using mugs and candy bars; subjects were asked to choose between the two. List (2003) used unique pieces of memorabilia which participants were unfamiliar with; finding showed that traders tend to turned to familiars object.
At first I didn’t understand fully what the paper was saying, however after reading, chapter eight on the section endowment effect and the discussions in the class I understood it much better. This study provided insight into the endowment effect for example: The value of goods increases when it becomes a part of a person’s endowment. The person demands more to give up an object than they would be willing to pay to acquire it. According to Kalmeman, Knetsch, and Thaler (1990) Run studies to determine whether the Endowment effect survives when subjects face market disciplines and have a chance to learn. One of the first Studies: was carried out using undergraduate economics class, participated in a series of markets, alternating students given Cornell coffee mugs valued at $6.00.
This study shows that people tend to put a higher price on personalised possession that they treasure more than things they just want to get rid of. Personally I find myself closely attach to gifts given by friends and family which are personal to me, these I find difficult to put a price on. Moreover, I would have no problem putting a price on something’s that I have personally bought myself and want to get rid, in order to earn some money especially if it is something not wanted. Reading this paper has increased my understand of the effect of endowment in different ways. Understanding of prospect theory, people tend to make decisions only if they are being benefitted from the decision at hand. Personally I would agreed with endowment effect, which suggested that people tend to overprice item when they trying to sell something in order to make a profit exceeding the value of the goods.
My understanding of the reading suggests behaviour does change as market experience is accumulating. There have been several experimental studies that suggested people tend to make decisions based on a higher value to things that they earned. In this paper several experiment has being carried out to explore whether the preference between two goods are independent of the consumer entitlement typical reports endowment effects for everyday consumable goods. The first experiment was carried out using mugs and candy bars; subjects were asked to choose between the two. List (2003) used unique pieces of memorabilia which participants were unfamiliar with; finding showed that traders tend to turned to familiars object.
At first I didn’t understand fully what the paper was saying, however after reading, chapter eight on the section endowment effect and the discussions in the class I understood it much better. This study provided insight into the endowment effect for example: The value of goods increases when it becomes a part of a person’s endowment. The person demands more to give up an object than they would be willing to pay to acquire it. According to Kalmeman, Knetsch, and Thaler (1990) Run studies to determine whether the Endowment effect survives when subjects face market disciplines and have a chance to learn. One of the first Studies: was carried out using undergraduate economics class, participated in a series of markets, alternating students given Cornell coffee mugs valued at $6.00.
This study shows that people tend to put a higher price on personalised possession that they treasure more than things they just want to get rid of. Personally I find myself closely attach to gifts given by friends and family which are personal to me, these I find difficult to put a price on. Moreover, I would have no problem putting a price on something’s that I have personally bought myself and want to get rid, in order to earn some money especially if it is something not wanted. Reading this paper has increased my understand of the effect of endowment in different ways. Understanding of prospect theory, people tend to make decisions only if they are being benefitted from the decision at hand. Personally I would agreed with endowment effect, which suggested that people tend to overprice item when they trying to sell something in order to make a profit exceeding the value of the goods.
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