行为经济学代考-BEHAVIOURAL ECONOMICS代写

SUMMER TERM 2020

24-HOUR ONLINE EXAMINATION ECON0040: BEHAVIOURAL ECONOMICS

行为经济学代考 Please, note that the candidate number is NOT the same as your student number (8 digits), which is printed on your UCL ID card.

All work must be submitted anonymously. 行为经济学代考

Please ensure that you add your candidate number and the module code to the template answer sheet provided. Note that the candidate number is a combination of four letters plus a number, e.g. ABCD9. You can find your candidate number in your PORTICO account, under “My Studies” then the “Examinations” container. Please, note that the candidate number is NOT the same as your student number (8 digits), which is printed on your UCL ID card. Submitting with your student number will delay marking and when your results might be available.

Page limit: 12 pages

Your answer should not exceed this page limit. This page limit is generous to accommodate students with large handwriting. We expect most of the submissions to be significantly shorter than the set page limit. If you exceed the maximum number of pages, the mark will be reduced by 10 percentage points, but the penalised mark will not be reduced below the pass mark: marks already at or below the pass mark will not be reduced.

Answer ALL questions from Part A and Answer ONE question from Part B.

All questions carry equal weight. Please keep your answers for both parts precise and concise.In cases where a student answers more questions than requested by the examination rubric, the policy of the Economics Department is that the student’s first set of answers up to the required number will be the ones that count (not the best answers). All remaining answers will be ignored. 行为经济学代考

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PART A 行为经济学代考

Answer ALL questions from this section.

A1

Consider Ana, with present-biased preferences, i.e. she has (β, δ)-preferences.

(a)Explain what is meant by (β, δ)-preferences, and how it departs from exponential discounted utility model. Why do these type of preferences lead to the problem oftime-consistency?

Now assume that and Ana is perfectly patient i.e. δ = 1. Suppose she needs to complete a task in one of the next 4 periods. As a function of when this task is completed,i.e.inperiods t ∈ {1, 2, 3, 4}, her reward schedule is denoted by b_t, where (b1, b2,b3, b4) = (4, 8, 14, 14); and her cost schedule is denoted by c_t, where (c₁, c₂, c₃, c₄) = (2, 2, 6, 10). However, there are two possible cases for when Ana receives these payoffs.

Immediatecosts: the cost is incurred when the task is done, and the reward is received in period 4, i.e. t = 4
Immediate rewards: the reward is received when the task is done, and the cost is incurred in period 4. i.e. t =4

(b)Consider the case of immediate costs. When would a naïve Ana complete the task, and when would a sophisticated Ana complete the task? Explain the derivations in detail and write down her perception-perfect strategy for each case.

(c)Considerthe case of immediate When would a naïve Ana complete the task, and when would a sophisticated Ana complete the task? Explain the derivations in detail and write down her perception-perfect strategy for each case.

(d)Explain intuitively whether your answer depends on the timing of the rewards and costs. What if Ana were a time-consistent and perfectly-patientindividual? Compare your findings.

(e)Nowimagine that you are tasked with designing a commitment mechanism that will help a present-biased Ana with completing the task at an optimal time. Explain your mechanism and define when and how your mechanism should be used.

A2

Consider two individuals whose preferences are represented by the Fehr and Schmidt (1999) model:

ui (xi, xj) =xi − α max{ xj − xi, 0} − β max{ xi − xj, 0}

(a)Interpret how the parameters β and α allow for different types of social preferencesfor these players and explain what their utility functions show about their preferences if α > β > 0 and β < 1.

(b)Now,suppose these players are playing a standard dictator game with a pie size of 60. Assume that What is the equilibrium share offered by

the dictator? What does this share depend on? Show and explain why. 行为经济学代考

(c)Now, take the samepreferences (with ) and the standard ultimatum game with a pie of size 60. The proposer keeps x1 and the respondent receives x2 = 60 − x1 if she accepts; and, both earn zero otherwise. Suppose both players have complete information about each other’s preferences.

(i)Which offers does the respondent accept? Show and explain.

(ii)Find the equilibrium share offered by the proposer to the responder.

(d)Are there any similarities and differences in the behaviour of the dictator inthe dictator game vs. the proposer in the ultimatum game?Explain.

(e)Based on experimental findings in the literature, are people altruistic; and do people enjoy being altruistic? Please cite relevant literature in support of your arguments.

PART B 行为经济学代考

Answer ONE question from this section.

B1

Kosse et al. (2015) design an intervention to study the effect of a programme on pro- sociality.

(a)Outline the potential outcomes framework, and use this framework to explain why the fundamental problem in programme evaluation can be thought of as either a missing data problem, or a selection problem. How can field experimentsbe used to identify the causal impact of a programme on outcomes?

(b)Kosseet (2015) provide correlational evidence which indicates that children who experience a higher intensity of social interaction with their mothers are more pro-social. Can we conclude from this evidence that there is a causal relationship between the social environment and the pro-sociality of the child? Explain. 行为经济学代考

(c)Describe the design of the field experiment conducted by Kosse et al. (2015). Which measure of pro-sociality do they use as their main outcome variable? Summarize the results with the help of Figure 1.

Figure 1: Pro-sociality (Kosse, F., Deckers, T., Pinger, P., Schildberg-Hörisch,

and Falk, A., 2020. The formation of prosociality: causal evidence on the role of social environment. Journal of Political Economy, 128(2).)

(d)The authors are additionally interested in whether the treatment was more effective for children who experience a lower intensity of interaction withtheir mothers at Which empirical approach do the authors use to answer this question and what do they find?

(e)What is the main conclusion of the paper? What are the potential policy implications? 行为经济学代考

B2

Mani, Mullainathan, Shafir and Zhao (2013) analyse the relationship between limited bandwidth and poverty.

(a)Why do these scholars think that studying this relationship is interesting? Why did they find the need to conduct two separate studies for theiranalysis?

(b)Explain the experimental procedure the authors used in this paper, particularly outlining the differences in the two studies they have

(c)What are their main findings? Does income affect cognitive function?

(d)Supposeyou have to design a policy addressing the issues analysed in this paper; what would your recommendations be? Who would be the ideal audience for your policy?

B3 行为经济学代考

Prospect Theory:

(a)What are the main building blocks of prospect theory and how does it differ from expected utility theory? Draw graphs if

(b)Describetwo empirical or experimental phenomena that can be explained by prospect theory but not expected utility theory. (Note: Please make sure that at least one of the examples has not already been discussed in class and is your own)

(c)Discussthe relationship between prospect theory and the Coase Relate your discussion to one empirical or experimental phenomenon either discussed in class or taken from the reading list.

(d)Consider Adam who needs to choose between two lotteries shownbelow: