Currently writing Lecture V of XXV · Prospect Theory
Last revised Tuesday, the 15th of September
A ledger of recent edits, in reverse chronological order. Each line is a lecture the instructor has touched since the last reading.
- Tue, Sep 15 V — Prospect Theory The alternative to expected utility: an editing stage and an evaluation stage; loss aversion and diminishing sensitivity; the value function, its three features, and a functional form; a practice problem; the implications for risky choice; and the probability weighting function, which is how people f&$# up probabilities. deck rewrite
- Thu, Sep 10 IV — Evidence that Contradicts Expected Utility, continued The rest of Kahneman and Tversky's problems, worked through in our language; then a theoretical problem for expected utility, the calibration theorem, which says that turning down small bets cannot be about a concave utility function; and the beginning of the fix: contrasts. deck rewrite
- Tue, Sep 8 III — Expected Utility, concluded · The Evidence Against It begins Two applications that finish the standard model; what the numbers a utility function returns do and do not mean; how to say that one person is more risk averse than another; and then the first cracks, where the theory stops describing anybody. deck rewrite
- Tue, Sep 8 II — The Standard Model: Expected Utility What a lottery is and how to write one down; why expected value describes nobody in this room; what risk aversion means, as against what it feels like; and the first appearance of the utility function. deck rewrite
- Wed, Sep 2 I — Welcome to Behavioral Economics What this course is and how to succeed in it; what behavioral economics is, and is not; how each topic will unfold; and what this website does and doesn't know about you. deck rewrite