Week 4

This week we were meant to read the paper "The Priority Heuristic: Making Choices Without Trade-Offs" and I found this paper not too difficult to read but sometimes quite confusing because of all the numbers. While reading this paper I have noticed that some of the information seemed quite familiar to me because we have touched upon it in cognitive 2.

We were then meant to do an exercise to measure our utility in two different ways. As shown on the right hand side I have done the exercise and roughly both graphs look the same. When plotting the graphs I got very confused and took me a long time to figure out how to do it. I'm not sure if I have the probability equivalence plotted correctly but I think the reason why it may look different is because of the figures and how the questions were set. For the certainty equivalence, it took me longer time to think about the questions than the probability one. It took me longer time because it really did make think through what to put down for my answers and that how much I'm willing to loose. I found it easier to put down the percentage because the higher the certain value gets, makes me clear that in order to make the lottery ticket and the certain value indifferent the percentage of winning the lottery must be higher. Completing this exercise makes me realise that I'm not a risk seeking person but rather a risk averse. I'm noticing this by when doing the exercise I'm not willing to spend a lot of money to risk wining more money and if I'm willing to then the percentage of winning more money must be high.

During the lecture, I found the taxi cases quite interesting that in America inexperience taxi driver would work longer on a normal day rather than a busy day. When I first heard that, I thought to myself why would they do that and not work longer on a busy day? After a bit of a discuss, I understood that taxi drivers set a target for themselves and therefore on a busy day, they can get off earlier because of reaching their targets quicker. I also understand the standard method to maximise earning is to take advantage on busy days, working longer and trying to earn more. Thinking about being a taxi driver, for me I would set a target for myself each day and work until I reach the target but also take advantage of working longer on busy days not setting a specific target. Wouldn't this maximise the earning even more?