TD L13

• descriptive theories explain that we choose A
• process accounts explain how we get to A

• describes the fact that we value items we currently own more than items we don't currently own 
• can be seen as the instance of the status quo bias
• can be explained by loss aversion

• buyers and sellers focus on different info when estimating prices
• buyers: money (what can i do with this money)
• sellers: tickets/experience  (this is a once in a lifetime opportunity)

• assuming that preferences are constructed
• when faced with a decision, we ask ourselves a series of questions in order to assess our preferences
• we ask the questions serially 
• we naturally start with the option that is presented as the default or status quo

• the hints half of you had likely interfered with your ability to think of a wider range of answers
• For a variety of reasons, we are unable to come up with more answers for our earlier questions (confirmation bias, retrieval-induced forgetting, cog dis, inhibition of later answers caused by first few )

• process theory that can help to explain the mental process that governs: temporal discounting
• framing effects
• endowment effect
• default effect

• when faced with a choice between two options, we stick with the default more often than we switch to the alternate
• default: the thing we would get if we failed to specify that we want the other thing

thoughts about option A are more frequent, comes first 

e.g. amount of time spent outside vs weather and violent crime rates

• Endowment predicts:
• order of thoughts
• number of thoughts
• choice/value 

mediation: endowment, thoughts, choice/value. EE driven by thought order (thought mediates effect of endowment on valuation of an item)

• influencing people's thoughts can change their choices
• make people consider the opposite first 
• natural thought order vs unnatural thought order

• natural thought order: what's good about the mug? what's good about money?
• unnatural thought order: what's good about money? what's good about mug?

after manipulation: earlier/more thoughts about not owning = more likely to choose/place a higher value on money

• buyers: whats good about money, about mug
• sellers: what's good about the mug, about money 

• Assign Ps to one condition or the other
• condition determines thoughts and price, without any actual endowment

• tailoring the presentation of a choice in such a way as to influence the decision
• Default effect is example of decision architecture tool

• we want gains now and losses later
• we leave money on the table
• we put off solving expensive problems

• discounting is reduced if there is no now options
• precommitments

• to encourage patience for gains, offer more gains and present it first
• to get people to give up money now, make the present the default