Sandy Student Is Having Difficulties in Her Advanced Accounting Class

question 67

Essay

Sandy Student is having difficulties in her advanced accounting class this semester.Sandy,who is a 21-year-old senior,is out consuming green beer on St.Patrick's Day and runs into Professor Debit,who was Sandy's Principles of Accounting professor.Sandy and Professor Debit discuss Sandy's current problems in accounting and have the following conversation:
Sandy: I just don't get it.I really know the material,I don't know how I got a "D" on the first exam.Professor Consolidation's exams are so hard.
Debit: I know that.I know a little about how Professor Consolidation makes up those exams.We've team-taught that course in the past.And,we see each other often.I'll tell you what I can do if you like.Before each of the remaining exams,we'll get together and I'll tell you exactly what you need to know to do well.We'll take as long as you want on a Saturday for a flat fee of $100.
Sandy: That sounds good except for one thing.I'm flat broke.I don't know if you remember that I work weekends at the Divide Basin Ski Area checking lift tickets.How about if I pay you $40 each exam,but allow you to ski without checking your lift ticket anytime I am working.Just make sure you have an old lift ticket on so everything looks proper.
Debit: It's a deal.Let's get another pitcher of this Old Stumpshovel Green Beer.I don't know if it's green from food coloring or from age,but it's finally starting to go down pretty smoothly.
The next exam comes along and Professor Debit spends several hours on a Saturday with Sandy.Sandy does better on that exam,but not as well as she had hoped because unknown to Debit or Sandy,Professor Consolidation had changed the format of his exams.The following week,Professor Debit goes skiing.As agreed,he has an old lift ticket visible,and Sandy lets Debit through the line,but tells Debit,"You are going to have to get a ticket after you take this run.I didn't get an "A" on that exam,so I don't feel I owe you anything.Besides,I'm now afraid I may get caught." Professor Debit buys a lift ticket and skis the rest of the day.Debit cancels class Monday morning in order to meet with an attorney regarding a lawsuit against Sandy,who has not yet paid the $40 for the session.If you were Debit's lawyer,what would you tell Debit about the strengths and weaknesses of the case against Sandy? Among Sandy's claims is a claim that the mistake over the format of the exam should allow her to rescind the contract.

Explain the concept of asymmetric information and how it leads to problems like moral hazard and adverse selection.

Identify and describe systematic behavioral mistakes such as overconfidence, availability bias, and brand loyalty despite evidence.

Explain the use of the Borda count and pairwise voting in decision making processes.

Understand the principles of behavioral economics with insights from psychology.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.