ains why they do not always follow the normative theories dictate that they should. 1. Expected utility 2. Heuristic

You are considering two options for your next family vacation. You can visit Disney World or Chicago. Your utility from Disney World is 100 if the weather is clear, and 0 if it rains. Chicago is worth a utility of 70 if the weather is clear and a utility of 40 if the weather is rainy. Also assume that the chance of rain at Disney World is going to be 50% and the chance of rain in Chicago is 40%. As a utility maximizer, should you plan to go to Disney World or Chicago? (Explain using relevant equations)

Alpha's Price Policy High Low OOOO A Multiple Choice C Beta's Price Policy High $20 $20 $10 $30 Low B $30 $10 $15 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Beta commits to a high-price policy, Alpha will gain the largest profit by $15 adopting a high-price policy. adopting a low-price policy. adopting a low-price policy, but only if Beta formally agrees to do the same. engaging in nonprice competition only.

9. Behavioral economics Indicate whether each of the following examples of behavior is consistent with the way the traditional economic framework suggests people should act, or whether it is reserved for behavioral economists to examine. Behavior There are people who pursue a degree in dance rather than informatics, even though high-tech careers are usually much higher-paying. Some people care more about how much money they make relative to others in their social network rather than their absolute income level. Some people treat $60 they earn differently from $60 they win playing powerball. People at all-you-can-eat restaurants eventually leave, even though they could continue eating for free. Consistent with Traditional Economic Model predictions Exclusive to Behavioral Economic theory