BUSI4506 BEHAVIOURAL ECONOMICS DECISION MAKING 2019-2020
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BUSI4506
A LEVEL 4 MODULE, SPRING SEMESTER 2019-2020
BEHAVIOURAL ECONOMICS DECISION MAKING
SECTION A
Answer all questions
1. Discuss the following terms in relation to behavioural economics:
a) Treatment .
b) External validity .
c) Salience .
[10 marks]
Describe the Ultimatum Game and discuss the theoretical solution and empirical findings related to the Ultimatum Game.
[10 marks]
Consider the game depicted in the table below.
(a) Identify the game illustrated in the table, discuss whether each firm has a dominant strategy and what is the theoretical solution of the game.
(b) How would the theoretical solution differ if this was a sequential game with company A making the first move?
[10 marks]
4. Discuss the following terms in relation to Fair Wage-Effort Hypothesis:
a) Incomplete contract .
b) Double auction .
c) Employee’s fixed cost .
[10 marks]
Describe the first price sealed bid (FPSB) auction and discuss the theoretical solution and empirical findings related to the FPSB.
[10 marks]
[Total 50 marks]
SECTION B
Answer one of the following questions
6. Assume you organise a series of potluck events (where food is brought by guests and shared by all). After the first two events, you find that only about half of the participants arrive with food.
Explain how you could setup experimental games to decipher why some participants tend to avoid contributing to the event. Describe and justify the selection of each game that you use.
[50 marks]
7. Distinguish between the dictator game and a power-to-take game and evaluate their empirical relevance. Further, discuss three (3) dimensions across which bargaining results could be evaluated.
[50 marks]
8. Discuss the empirical evidence of gift-exchange games in the labour market and the market for charitable giving.
[50 marks]
2022-05-26