Here you can find a list of questions/problems for the final test. The list is now complete.

Decision under uncertainty

• What is certainty equivalent?
• Explain independence axiom.
• What is common consequence effect? What are the implications for EUT?
• What is common ratio effect?  What are the implications for EUT?
• There is an evidence that people systematically deviate from EUT. Describe the pattern.
• Suppose that you elicit certainty equivalents (CE) for lotteries where you get higher amount with probability p and smaller amount with probability 1-p. How would you expect that CE depends on p?
• Explain the concept of probability weighting (PW). Highlight differences between PW and expected utility theory (EUT).
• Describe main elements of rank-dependent utility theory?
• Suppose that you have  lotteries where you get higher amount with probability p and smaller amount with probability 1-p. How would you interpret the probability weighting function w(p) in this particular case?
  
• Describe the common (i.e. empirically observed) shape of  the probability weighting function.
• Describe the observed heterogeneity in the shape of  the probability weighting function?
• What is endowment effect? How does it relate to loss-aversion?
• Discuss how market experience affects endowment effect (your argumentation should be based on some academic paper). 
• Explain the concept of reference point.
• Explain the concept of loss-aversion.
• Explain a difference between rank-dependent utility theory and prospect theory? 
• Name and shortly describe some field evidence for loss-aversion (your answer should be based on some academic paper).
• What is considered to be a reference point? List and explain main possibilities.
• Prospect theory assumes particular shape of the value function. Plot it and explain. 

Information and biases

• Describe rational benchmark for dealing with new information.
• Describe confirmatory bias and give examples of evidence that documents the bias.
• Discuss how the confirmatory bias depends on the desirability of new information (i.e. good vs. bad news)
• Explain and give example of evidence for hot hand fallacy and gambler's fallacy.
• Explain overconfidence and list manifestations of overconfidence.
• Give examples of some field evidence (i.e. coming from real world not laboratory) for overconfidence bias.
• Explain projection bias by using O'Donoghue and Rabin model.
• Give example of evidence for porjection bias. 

Fairness and social preferences

• Give several examples of evidence that people have social (other-regarding) preferences.
• Describe ultimatum game and typically observed behavior in this game.
• Describe gift-giving game and typically observed behavior in this game.
• Write down and interpret the inequality aversion utility function.
• Explain the main criticism of Fehr-Schmidt model (i.e. inequality aversion).
• Explain the main differences between theories based on distributional prefences and reciprocity. 
• Give several examples of evidence for reciprocity theories of social preferences.
• Give example of evidence that monetary incentives can crowd out intrinsic motivation.
• Explain the role of observability in situations when  monetary incentives can crowd out intrinsic motivation. Give example of some evidence that supports your explanation.
• Describe the basic setup of Benabou and Tirole model of intrinsic motivation and reputational concerns. What effects are in place when monetary incentives become stronger.
• Describe public goods game and typically observed behavior in this game.
• What types  of players are usually identified in public goods game? What is the consequence for observed outcome in public goods game?
• What is the effect of punishment in public goods game? What is the anti-social punishment?

Time preferences

• Write down and explain exponential discounting utility function.
• List and explain main properties of  exponential discounting  model?
• Define time-consistency. How is it related to exponential discounting?
• Describe so called MEL (money earlie or later) experiements?
• Discuss the conditions under which MEL experiments measure time preferences (i.e. discounting).
• Besides MEL, what other approaches can be used to measure time preferences? Give examples.
• What is the common difference effect?
• Discuss the empirical relationship between time preferences and individual traits (e.g. age, gender, etc.)
• Write down and explain hyperbolic discounting utility function. 
• Write down and explain quasi-hyperbolic discounting utility function.
• Plot and show differences between shapes of exponential, hyperbolic and quasi-hyperbolic utility functions.
• Explain the concept of present-biased preferences?
• Describe the model of multiple-selves? What types of decision makers can be distinguished in this model.
• Give example of several empirical phenomena that can be explained by time-incosistent preferences?