1.
Misbehaving
As well as, Thinking Fast and Slow
Tarek Amr

2.
Definitions
Utility:
Utility is an economic term introduced by Daniel Bernoulli referring to the total
satisfaction received from consuming a good or service.
Surplus:
Consumer surplus occurs when the price for a product or service is lower than the
highest price the consumer would pay. Producer surplus occurs when goods are
sold at a higher price than the lowest price the producer was willing to sell for.

3.
Probability = 30%
Probability = 20%
$ 900
$ 800
Whichonewillyouchoose?

4.
Probability = 100%
Probability = 50%
$ 500
$ 1200
Whichonewillyouchoose?

5.
Prospect Theory (By Daniel Kahneman & Amos Tversky)
Diminishing Returns & Risk Aversion

6.
Probability Weighting (By Daniel Kahneman & Amos Tversky)
Think of people as if they are uncalibrated classifiers

7.
Risk (Aversion vs Seeking)
Probability = 100%
Probability = 50%
$ 500
$
1200

8.
Risk (Aversion vs Seeking)
Probability = 100%
Probability = 50%
$ 500
$
1200
People are risk-averse for gains,
but risk-seeking for losses.

9.
Endowment effect
People valued things that were already part of their endowment more highly than
things that could be part of their endowment, that were available but not yet
owned.

10.
Endowment effect
People valued things that were already part of their endowment more highly than
things that could be part of their endowment, that were available but not yet
owned.
Seller Buyer

11.
Market with known values
We can buy your
token for:
$ 1 $ 2 $ 3 $ 4

12.
Market with known values
We can buy your
token for:
$ 1 $ 2 $ 3 $ 4
Buy token (N/4 Transactions)

13.
Market with unknown values
We is the value of
the mug:
?? ?? ?? ??
Much less transactions

14.
Seller Buyer
Buyer Utility
Reservation Price
Winning Bid
SellerSurplus
BuyerSurplus

15.
Definitions
Acquisition Utility (?):
Acquisition utility is based on standard economic theory and is equivalent to what
economists call “consumer surplus”.
Transaction Utility (?):‍
It is defined as the difference between the price actually paid for the object and the
price someone would normally expect to pay, the reference price.

16.
Problem with assigned budgets

17.
Game: of mean⅔
Guess a number from 0 to 100 with the goal of making your guess as close as
possible to two-thirds of the average guess of all those participating in the contest.