Economics 102: Discussion Questions

Economics 102: Discussion Questions.

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Econ 102 Discussion

Pages: 1 (150 words)

Deadline: 45 minutes

week 4 Economic theory assumes that we act rationally. Define bounded and full rationality. On page 101 of the text are two terms: self-regarding preferences and other-regarding preferences. Give two examples each where you applied each of these principles in your personal life.

After your initial post, respond to at least two of your classmates’ posts. Your initial post should be at least six complete sentences and your reply to your classmates’ posts should be at least three complete sentences.

Bounded Rationality is the assumption that people intend to make choices that best serve their objectives, but have limited ability to acquire and process the information.

Full Rationality is the assumption that people make full use of all available information in calculating on how best to meet their objectives.

Self-Regarding Preferences are a set of objectives that depends only on the material welfare of the decision maker. A real life example of a Self-Regarding Preference was earlier this year when I invested my personal income into stocks in order to possibly make more money. Another example was when I was playing Cities of Catan (a board game) with friends and decided to monopolize all of the clay resources by preventing another friend from obtaining any. Therefore, myself being the only one to obtain any clay throughout multiple turns and having advantages of selling it to others.

Other-Regarding Preferences are a set of objectives that includes not only the material welfare of the decision maker but also the material welfare of others and their attitudes. Some examples of Other-Regarding Preferences that I have encountered are the time I donated to the St. Jude organization. I used to work at a children’s hospital that specified in cancer patients, so I decided to help in more than one way. Another example would be the time I bought a blanket for a homeless mother and her child during the winter because of how cold it was outside.

few seconds ago

Full rationally is an assumption that people will use all the information that is available to make decisions that meet with their goals and objectives.

This is different to Bounded rationality, which an assumption that people will make decisions based on their objectives despite their limited ability to obtain and process information

Self-regarding preferences are when the objectives that being met are only benefiting the decision maker. For example, when I get a drink from the fridge, I usually get one for myself. This is a simple example but it is self-regarding preference because I could ask other family members if they want a drink but I choose not to.

Other-regarding preferences is when the objectives not only benefit the decision maker but also others and their feeling. I remember helping out with my family when they volunteered for the Lion’s Club. I felt like not only other people who need help benefited but I felt better. This idea can be further expanded with an organization I found out about called Street Thug Barbers. They are Vancouver based Barber Shop who cut and style hair for the homeless for free in a local park. According to them, they found the experience rewarding and the homeless felt like they had more self-esteem after the experience.

In this example, I would like to stress that people aren’t always motivated by self-regarding preferences. The barbers are working for free and the homeless aren’t just showing up for a free haircut. I find it interesting as self-regarding preferences can be powerful but other-regarding preferences can be just as powerful.

These are the answers of my two classmates

respond to at least two of my classmates

Rationality

Bounded rationality is the analogy that individuals must make choices and preferences based on the available limited information to achieve their goals.

Full ratioanlity  assumes that customers use general theoretical knowledge with the boundaries being unlimited. They can make any choice using unlimited sources in the business world.

Self-regarding preferences are choices and objectives met that are selfish, thus benefitting the action doer. For example, when I chose to partake a vacation alone without consulting my siblings, then do enjoy the experience along within the long run. Also,

Other- regarding preferences are activities and choices made to benefit others more than the idea’s originator. For example, I can recall proposing a job opportunity for my father when I was ten years old. I overhead the same during a visit to my friend’s father. Ideally, the opportunity benefitted my father and our family for a while before things worked out in his career.

Response One

I am pleased by your post, and I  agree with the insights highlighted. Bounded rationality confines with my reasoning and alludes to the rational nature of consumers. A buyer must make choices based on valuable resources and individual needs and preferences in the long run. Thus, the bounded charter may be confined by finances or even designs, thus being forced to settle with one option. The personal examples are interesting to read, and it shows that you understood the topic.

Response Two

I am delighted by the post, and I cannot disagree with the ideologies highlighted therein. Other regarding preferences attracts my attention since the topic is explained well and in detail. You have sighted that individuals re not encouraged by self-satisfying endeavors, and I concur with you. We are bound to live and work fro others purposely to make them happy, and in the end, personal happiness is attained.

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