Week 6 Flashcards
What is predictable irrationality?
Predictable irrationality is the tendency of individuals to consistently make decisions that are not in their own best interests, despite knowing better.
What happens when individuals do not behave according to the rationality model?
When individuals do not behave according to the rationality model, they may make decisions that are not in their own best interests, and may not maximize their own welfare.
What happens when people are rational but have other-regarding (social) preferences?
When people are rational but have other-regarding (social) preferences, they may make decisions that prioritize the welfare of others over their own.
How does predictable irrationality impact decision-making?
Predictable irrationality can lead individuals to make decisions that are not in their own best interests, and may result in suboptimal outcomes.
How can predictable irrationality be addressed?
Predictable irrationality can be addressed by providing individuals with the necessary information and tools to make informed and rational decisions.
What are other-regarding (social) preferences?
Other-regarding (social) preferences refer to individuals’ concerns for the welfare of others, and the impact of their decisions on others.
What impact do other-regarding (social) preferences have on decision-making?
Other-regarding (social) preferences can impact decision-making by leading individuals to prioritize the welfare of others over their own.
How do we think about welfare when individuals are not rational?
When individuals are not rational, we may need to consider alternative ways of thinking about welfare, such as prioritizing the welfare of the group over the individual.
What role does decision-making play in welfare?
Decision-making plays a critical role in welfare, as the decisions individuals make can have a significant impact on their own and others’ welfare.
