Explain the Behavior Bias Being Made in the Following Scenarios

question 74

Essay

Explain the behavior bias being made in the following scenarios.
a. A baseball team offers a lottery for the random chance to buy season tickets at a deep discount. The fans who paid full price for season tickets are more likely to attend games than the fans who bought discounted season tickets.
b. A person prefers $50 today to $100 one year from now but prefers $100 in six years to $50 in five years.
c. A person is more likely to drive across town to save $5 on the purchase of a $10 calculator than drive across town to save $5 on the purchase of a $100 coat.

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Definitions:

Fixed Component

The portion of a cost that remains constant regardless of the level of activity or output.

Overhead Efficiency

A measure of how effectively a business uses its overhead costs in the production process, often improving profit margins when increased.

Overapplied

In cost accounting, it refers to a situation where the allocated overhead for a period is more than the actual overhead incurred.

Underapplied

A situation where the assigned manufacturing overhead expenses fall short of the real overhead costs that have been spent.