BEHAVIORAL ECONOMICS ANALYSIS

BEA REPORT INSTRUCTIONS

Below are a handful of behavioral phenomena you should know that are not described in your main textbook. Each stems from Behavioral Economics and contradicts Rational Choice Theory.

1. Availability Heuristic
2. Anchoring Effect
3. The Framing Effect
4. Mental Accounting
5. Prospect Theory
6. Risk Aversion
7. The Endowment Effect
8. The “Sunk Cost” Effect
9. Omission Neglect
10. Counterfactual Thinking
11. The Curse of Social Comparison
12. Confirmation Bias
13. Analysis Paralysis
14. Expressive Value
15. Hedonic Adaptation

THE BEA REPORT

This report contains two parts: Part A and Part B. Both must be submitted together. (12pts)

Part A: Define each of the above phenomenon and give a brief example. (Do not plagiarize.)

Part B: Choose 1 of the above phenomena and do the following: (4pts)

1) Explain the theory/bias/effect. Do not just copy/paste what you’ve written for it in Part A. This requires a fresh rewrite. (4pts)

2) Describe 2 different examples of occasions when it might affect a consumer. (4pts)

3) Explain how it contradicts Rational Choice Theory (Note: You will need to further research RCT.) (4pts)

4) Provide a strategy for helping a consumer maximize his/her utility given this Behavioral Economics phenomenon.

ADDITIONAL INSTRUCTIONS

• Font, spacing, and margins are up to you. Just make it legible.
• This report must be written in a professional manner; do not include personal opinions, only facts.
• Do not write in 1st or 2nd person voice (i.e., do not write I/we or you.) This should be based on fact, not opinion.
• Write your name(s) in the header and save the file as: YourName_BEAReport
• For Part B, you may choose a different Behavioral Economics phenomenon not listed in Part A (of which there are many) that contradicts RCT, but first get it approved by me.
• For Part B, you must have a minimum of 3 references, and all must be cited using in-text citations. Both in-text citations and references should be in APA format. (Note: APA format does not use “works cited”, bibliography, end notes, nor footnotes.) APA Guidelines: https://owl.english.purdue.edu/owl/resource/560/01/ You do not need to add references for Part A, but please make sure nothing is plagiarized and you use your own words.
• Page limit: 3pgs for Part A and 3pgs for Part B. This will be hard to do effectively (without sacrificing content) and that is by design. Brevity/conciseness is a virtue in business. Tell me only the most important information in a succinct way; leave out the fluff.
• If using a website as a reference, make sure it is a reputable/trustworthy source and do your best to locate the author if it is not listed. (Hint: You can usually find it on the About Me page.)
• Submit the assignment as an attachment. Turn in a Word document (not PDF or .wps or .pages). Do not email it to me directly. Emailed/late assignments will not be accepted (no exceptions!) since these assignment instructions will be posted from the first day of class, which means you have roughly 2 weeks to complete it.

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