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Comments on the Final Exam
The final exam will primarily cover conceptual
issues that we've covered in the readings and in class. Topics
covered in class will naturally get the most emphasis, although
some material from the readings that did not get much class time
is of course also fair game.
Questions will mostly be short answer and essay
in nature. There may also be a simple calculation or two (e.g., a
Bayes Rule problem, a simple application of regression, an
expected utility and/or expected value calculation).
You may appeal to 3 regular size (8.5 x 11
inch) sheets of notes for the exam. Don't worry, you will not
need to memorize trivial details.
If the following list of terms and concepts is
familiar to you, all should be well. ("Familiar"
roughly means that you could provide a short definition,
description, or example of each concept, explain why it's
important, and/or note similarities and differences between
related concepts.)
- descriptive and normative analyses of
decision making and judgment
- tradeoffs and uncertainty; beliefs and
values
- misperceptions of chance; the gambler's
fallacy; the hot hand in basketball
- illusory correlation; the illusion of
control
- decision processes and decision outcomes;
self-serving attributions of luck and skill
- evaluting good decisions and good decision
makers
- feedback problems: missing, entwined,
confused, and ignored feedback
- intuitive prediction and formal models:
strengths and weaknesses
- regression to the mean and nonregressive
prediction
- base-rate neglect; Bayes Rule
- conjunction fallacies in judgment
- overconfidence
- the winner's curse
- letting sunk costs influence decisions
- confirmation bias
- availability heuristic
- representativeness heuristic (and local
representativeness)
- anchoring and adjustment heuristic
- value-focused thinking (vs. alternative
focused thinking)
- decision metaphors
- boundaries, yardsticks, reference points
- endowment effect and status quo bias
- integrating beliefs and values
- expected value; St. Petersburg Paradox;
Expected utility theory
- axioms of rational choice
- risk attitudes: risk aversion and risk
seeking
- isolated and combined choices (and
"isolation errors")
- the Allais paradox
- prospect theory value function
- outcomes defined as gains and losses
relative to a reference point
- diminishing sensitivity of gains and
losses
- loss aversion
- prospect theory probability weighting
function
- possibility, certainty, and
pseudocertainty effects; diminishing sensitivity of
probability
- mental accounting; integrating and
segregating gains and losses
- acquisition and transaction utility
- intertemporal choice anomalies:
non-constant discount rates (varying as a function of
outcome size, time delay, gains/losses, etc.); negative
discount rates; reference points in intertemporal choice
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