Shared Flashcard Set

Details

Micro Test 2
Econ
18
Economics
Undergraduate 3
03/14/2012

Additional Economics Flashcards

 


 

Cards

Term
full disclosure principle
Definition
individuals must disclose even unfavorable information so that people won't think the worst.
Term
fair gamble
Definition
a gamble whose expected value is zero.
Term
certainty equivalent value
Definition
amount of money you'd have to give someone to be indifferent about taking a gamble.
Term
reservation price
Definition
amount you'd be willing to pay for insurance
Term
adverse selection
Definition
stupid people are more likely to need insurance
Term
moral hazard
Definition
people taking advantage of insurance
Term
commitment device
Definition
a device that commits a person to behave in a certain way in the future, like blackmail
Term
cost of vigilance
Definition
cost to determine who cooperators are
Term
Weber-Fechner law
Definition
the property of perception whereby the just noticeable difference in a stimulus tends to be proportioned to the value of the stimulus
Term
commitment problem
Definition
Arise when one could do better to go against their narrow material interests.
Term
cheating problem
Definition
people are tempted to defect, but then everyone can defect and make everyone worse off.
Term
bounded rationality
Definition
the notion that it is irrational to be completely well-informed, as the costs are too high.
Term
out of pocket vs. opportunity costs
Definition
out of pocket costs are losses while opportunity costs are forgone gains. Because losses hurt more, people will not accept good deals
Term
affective forecasting errors
Definition
failure to take into account all the benefits or costs of something over time.
Term
Anchoring and Adjustment
Definition
Basing an average off of the first couple as opposed to the whole.
Term
halo effect
Definition
when one trait, like physical attractiveness, effects a person's overall judgment of you.
Term
variable input
fixed input
Definition
an input that can be varied in the short run
an input that cannot be varied in the short run.
Term
marginal rate of technical substitution
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.
Supporting users have an ad free experience!