In a Survey of Consumers,Daniel Kahneman,Jack Knetsch and Richard Thaler

question 60

Multiple Choice

In a survey of consumers,Daniel Kahneman,Jack Knetsch and Richard Thaler asked their opinion of a hardware store's decision to

• A)go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store.
• B)raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.
• C)sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair.
• D)remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there no other hardware stores in the same area.

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Definitions:

Conditional Probability

This is the probability of an event occurring given that another event has already occurred.

Expected Value

A statistical concept that calculates the average outcome when the future includes scenarios that may or may not happen, often used in decision-making and risk assessment.

Outcome

The result or consequence of an action, process, or situation, typically measured against expected or intended objectives.

Expected Monetary Value

A statistical concept used to calculate the average outcome when the future includes scenarios that may or may not happen.