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Inferring Preferences from Choices
An individual, Alex, wins a £200 prize and decides to keep £150 for themself and give £50 to their friend, Ben. A different individual, Chris, wins the same £200 prize but chooses to keep the entire £200 for themself. Based on these actions alone, contrast the likely preferences of Alex and Chris. Explain what each decision reveals about how they value their own financial gain relative to their friend's.
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Library Science
Economics
Economy
Introduction to Microeconomics Course
Social Science
Empirical Science
Science
CORE Econ
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Optimal Choices for Altruistic vs. Self-Interested Preferences in Zoë's Dilemma
Zoë's Constrained Optimization Problem
An individual wins £200 and is deciding how much, if any, to share with a friend. The winner's personal satisfaction increases with both the amount of money they keep and the amount their friend receives. Suppose that just before the decision is made, the winner learns that their friend has unexpectedly received a separate £50 gift from another source. How would this new information most likely alter the winner's sharing decision regarding the £200 prize?
Analyzing Preferences in a Sharing Scenario
An individual with purely self-interested preferences wins a £200 prize. This individual would be indifferent between the outcome where they keep all £200 for themselves and an alternative outcome where they keep £150 and give £50 to a friend.
An individual with altruistic preferences wins a £200 prize and is deciding how to split it with a friend. The individual's happiness increases with both the amount of money they keep and the amount their friend receives. Given this, which of the following statements most accurately describes their likely decision-making process?
Inferring Preferences from Choices
An individual wins a £200 prize and is deciding how to allocate it between themself and a friend. The individual's preferences are altruistic, meaning their personal satisfaction is positively affected by both the amount they keep and the amount their friend receives. Given four potential scenarios, which outcome would result in the lowest level of satisfaction for this individual?
Evaluating Altruism from Observed Choices
An individual wins a £200 prize and must decide how to allocate it between themself and a friend. Match each of the following preference types to the allocation choice that an individual holding those preferences would most likely make.
Deconstructing an Altruistic Choice
Zoë's Feasible Set and Budget Constraint in the Lottery Dilemma
Altruistic Choice as a Decision Problem, Not a Game
Modeling Altruistic Choice as a Budget Allocation Problem
Social Preferences Determine Indifference Curve Shape (Figure 4.10)