Professional Documents
Culture Documents
Dr Matthew Levy
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Paying Not to Go to the Gym
• DellaVigna and Malmendier observe gym attendance for
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
contracts:
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Fig 1
N = 912 Fig 1 Full LSE logo in colour N = 912 N = 145 N = 145
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
Notes: The number of observations is denoted by N. An enrollment spell starts whenever an individual enrolls (or re-enrolls) in the club and ends whenever the
individual quits or is censored. The sample “First spell” consists of the first enrollment spell. The sample “First spell and no subsidy” restricts the sample “First
spell” to those spells in which the average adjusted monthly fee is at least $70 if the spell starts with a monthly contract and at least $58 if the spell starts with an
annual contract. The spells in column “First Contract Monthly, months 1-6” start with a monthly contract. The spells in column “First Contract Annual, year 1” start 4
with an annual contract. The variable "Price per attendance" is defined as the ratio of the average price over the average attendance over the firsy period (6
Fig 2 LSE logo – clear space
Fig 2
x x months for the monthly contract, one year for the annual contract).
The clear space around the logo must be
x equal to the space between the LSE
POLITICAL SCIENCE
The clear space is indicated by the blue line.
Nothing must enter this area.
(Sorting)
The clear space must continue around any
x
element (eg text, sub logos) attached to
x x the LSE square
Average attendance during the n-th month since enrollment
Sample: First spell, all clubs
Month 2 Month 3 Month 4
Paying Not to Go to the Gym
LSE logo
Monthly contract 5.500
(0.0658)
N = 6380
4.998
0.069
N = 5783
4.592
0.070
N = 5390
• Timing:
Annual contract in period 0, the5.583
agent chooses
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
5.797 5.151
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
a contract from a
(0.1865) 0.191 0.188
365 days)
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
−c + β̂δb − p ≥ 0
⇒ c ≤ β̂δb − p
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Paying Not to Go to the Gym
• So when does a β β̂δ agent prefer a flat-rate contract
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
find:
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
∫ β̂δb−p ∫ β̂δb
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
1 − δT
L≤ pdF (c) + (δb − c)dF (c)
1−δ | −∞ {z }
β̂δb−p
} | {z
low-cost days intermediate-cost days
• On low-cost days
1
(c ≤ β̂δb − p), the agent thinks she will
always go to the gym. The flat-rate contract simply saves
her p
• On intermediate-cost days, the agent thinks she will go
only under the flat-rate contract. But the value to her is
only δb − c ≤ p
• On high-cost days (c > β̂δb), the agent thinks she will never
Fig 1 Full LSE logo in colour
go.
Fig 1
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Paying Not to Go to the Gym
• Thus the “paying not to go to the gym” evidence could
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
surplus”)
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
• If sophisticated, they are not over-paying but instead value
The abbreviated version is the square block with the letters LSE (fig 4).
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Contract Design and Self-Control
• Require technical assumption for FOC to yield maximum
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
∂Π(p) ( )
= δ(a−p) f (βδb−p)−(1− β̂) δbf (β̂δb−p)− F (β̂δb−p)−F (βδb−p)
∂p | {z } | {z } | {z } | {z }
>0 ≥0 >0
≥0
1
• If agent is time-consistent, p∗ = a
• If agent is sophisticated, p∗ = a − (1 − β)δb
• If agent is fully naive, p∗ = a − [F (δb−p)−F (βδb−p)]
f (βδb−p)
• So below marginal cost pricing (for investment good) is
consistent with any type of present bias.
Fig 1 Fig 1 Full LSE logo in colour
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Procrastination on Cancellation
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
cutoff strategy:
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Procrastination on Cancellation
• Using the recursive structure of V ():
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
( ) ( )
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
E E E
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
[V (ct , c̃)] = P r(ct ≤ c̃) -f − [ct |ct ≤ c̃] +P r(ct > c̃) -f +δ [V (ct+1 , c̃)]
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
c̄ c
V = −f −
c 2
• First term: higher c will incur f for fewer periods; second
term: will incur a higher cost in expectation
Fig 1 Fig 1 Full LSE logo in colour
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Procrastination on Cancellation
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
suitable for print. • Now that we have beliefs, we want each self to
Never download the logo from the internet. Web versions are screen resolution and not
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
best-respond.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
E
The abbreviated version is the square block with the letters LSE (fig 4).
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Figure 3a. Simulated expected number of days before a monthly member switches to payment per visit.
• Sophisticates may delay
Assumptions: Cost k~N(15,4), daily savingsbriefly;
s=1 and dailynaifs
average delay is 2.3 months (70 days) (Finding 4).
may
discount factor procrastinate
delta=.9995. The observed
Fig 1
arbitrarily long for β < 0.65 Fig 1 Full LSE logo in colour
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Procrastination on Cancellation
• Calculate a conservative measure of cancellation lag:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
termination
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print. Figure 3b. Simulated probability that cancellation delays last more than 120 days. Assumptions as in
E.g.3a.ifThe
• Figure final attendance
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
observed
around the logo is shown above, and defines an area into which nothing should intrude. is 10
share of agents with delay
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
March
over 120 days is 20and cancellation
percent (Finding 4). is 5
April, only count as 1 full month
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Naiveté: One last example
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
(u − s) ≤ β̂δd ⇒ s∗ = u − β̂δd
• Would this be worth the cost?
βδ
u − βδd − (u − β̂δd)q ≥ u + (u − d)
( ) 1 − δ
d−u
βδ − d ≥ q(u − β̂δd)
| {z } | 1 − δ | {z }
{z } ≥0
≥0 ≥0
• Thus if β > 0, δ > 0, and u − β̂δd, there is a q̄β̂ > 0 such that
Fig 1
the agent would strictly prefer this contract for all q < q̄β̂ Fig 1 Full LSE logo in colour
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Naiveté: One last example
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
commitment device
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
24
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences
• When thinking about reference-dependent preferences
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Short-run fluctuations:
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences
• But this “human capital” is just a specific way to interpret
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
variable:
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
Ut = U ( C
around the logo is shown above, and defines an area into which nothing should intrude.
⃗ t; S
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
⃗t )
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
⃗t = S(C
S ⃗ t−1 , C
⃗ t−2 , ...; S
⃗t−1 , S
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
⃗t−2 , ...)
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences
Evidence
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
h ypot h esis t est s below we r epor t sim pler t wo dim en sion a l ANOVAs or t t est s.
Fig 1 Full LSE logo in colour
Fig 1
All sign ifica n t r esu lt s r epor t ed below a r e a lso sign ifica n t in t h e fou r dim en -
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
sion a l ANOVA.
8
Fig 2
x x
H ypoth eses 1 th rou gh 3: Con cern in g In traperson al E m path y Gaps
Fig 2 LSE logo – clear space
THELONDON AsSCHOOL
ca n be seen in F ig. 1, t h e pr opor t ion s of u n h ea lt h y sn a cks ch osen for
lettering and the edge of the red square.
This applies to the reproduction of the logo
OF E CONOMICS AND
at any size
x x
t h r ou gh Hx 3: PA(H S) wa s gr ea t er t h a n PA(SS), PA(H H ) wa s gr ea t er t h a n PA(H S),
element (eg text, sub logos) attached to
the LSE square
LSE logo
State-Dependent Preferences PA(SH ) 2 PA(SS) 5 30%; PA(H H ) 2 PA(H S) 5 36%. Th e com posit e h ypot h esis
wa s t est ed by m ea n s of a 2 3 2 a n a lysis of va r ia n ce on a dva n ce ch oices, wit h
h u n ger /a a n d h u n ger /i t r ea t ed a s a r epea t ed m ea su r e. Th e a n a lysis con fir m ed
The LSE logo Evidence
is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should abem usedaonin effect
all School publicationsofand bot h h u n ger /a [F (1,196) 5 8.5, p , .004] a n d h u n ger /i [F (1,196)
heroin addicts
around the logo is shown above, and defines an areacla imnothing
into which t hshould
a t intrude.
t h er e is a h ot -t o-cold a s well a s a cold-t o-h ot em pa t h y ga p, t h a t
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures aren theeit h er em pa t h y ga p is com plet e (i.e., pa r t icipa n t s did t a ke fu t u r e h u n ger or
only exception).
• Day 11: Double dose The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences
Evidence
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
suitable for print. examples; instead, they always seem to predict that their
Never download the logo from the internet. Web versions are screen resolution and not
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
ones
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
• If hungry, think future selves will be relatively hungry
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias
• In period t, the agent thus believes her optimisation
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
problem is:
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print. ∞
∑
δ τ ũ(cτ , sτ |st )
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
t
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
max Ũ (ct , c̃t+1 , ...|st ) =
ct ,c̃t+1 ,c̃t+2 ,...
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
τ =t
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
Fig 1
max t
t Ũ (ct , c̃t+1 , ...|st ) =
ct ,c̃t+1 ,c̃t+2 ,...
E
δ τ [ũ(cτ , sτ |st )]
Fig 1 Full LSE logo in colour
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Durable Goods
• Think back to the very first model of reference-dependent
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
endowment effect.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
is:
{
M mt + G(mt − rt ) + yt , if mt − rt ≥ 0
u(mt , yt , rt ) =
M mt + λG(mt − rt ) + yt , if mt − rt < 0
1
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
∑
T +1
Ũ (buy) = ũ(1, −yB , 0; 0) + ũ(1, 0, 1; 0)
s=2
= −yB + M + G + T (M + αG)
⇒yB = (T + 1)M + (1 + αT )G
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Durable Goods
• Consider a mug-endowed agent looking to sell:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
∑
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here. T +1
′
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
Ũ (don t sell) = ũ(1, 0, 1; 1) +
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
ũ(1, 0, 1; 1)
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
s=2
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
= (T + 1)M
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
∑
T +1
Ũ (sell) = ũ(0, yS , 1; 1) + ũ(0, 0, 0; 1)
s=2
= yS − λG + T (−αλG) = yS − (1 + αT )λG
1
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Durable Goods
Evidence
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
(Northwestern), but:
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
•theyFirst
calledasked
the flip for selling
correctly price
and got for After
a mug.2 event they win
providing sellingcoin
prices,toss
subjects individually called a coin toss and were given a mug if they called it
•correctly.
ThoseFinally,
whothosewonwho then asked
received a mugifwere
want towhether
asked revisethey selling
would price
like to revise their selling price (although they were not actually allowed to do 1
• This is not
SO).3
asking whether sellers over-price, but rather
whether mugless realise their
Table valuations
2 will increase
Mean Valuationof Mugs
Number of Prediction
Group Form Description subjects of valuation
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Durable Goods
• Many of our largest expenditures (house, automobile) are
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
⃗l,⃗c
rt = γrt−1 + ct−1
and the agent has the opportunity to commit to a high 1
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
24
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
∂2U
>0
∂st ∂ct "
u
Fig 1 Fig 1 Full LSE logo in colour
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences and Habit Formation
From Habits to Addiction
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
dependence:
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences and Habit Formation
A simplified model of rational addiction
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
cutoff rule
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
OF E CONOMICS AND
POLITICAL SCIENCE
speed of habit at any size
LSE logo
State-Dependent Preferences and Habit Formation
A simplified model of rational addiction
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
j=1
1 1
= ȳ − ϕs s0
1 1−δ 1 − δγ GP: Infin sum - y today and
discounted in future.
• First term: gets to consume full amount of numeraire
Double discount on S0 =>
always hence RHS 1-DG on denom
• Second term: suffers due to initial addiction level, but
discounted by δ · γ in future periods
Fig 1 Fig 1 Full LSE logo in colour
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences and Habit Formation
A simplified model of rational addiction
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
∞
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
ϕas s0 ϕa ∑
∗
p0 ≤ p = − δ j pj + ζ
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
+
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1 − δγ 1−δ |{z}
Also you can use either the abbreviated or full version of the logo.
| {z } j=1
The abbreviated version is the square block with the letters LSE (fig 4).
| {z } tolerance
withdrawal enjoyment
avoidance
∂p∗
• Note 1: > 0. Cutoff 1
∂s0
∂ 2 p∗
• Note 2: < 0. Less sensitive to current state.
∂δ∂s0
• Note 3: ∂p∗ /∂pt = −δ t . Forward-lookingness.
Cutoff price dep non future price.
If I hit today im going to end up paying more in future - increasing
Fig 1 Fig 1 Full LSE logo in colour
pt.
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
If price of cigs +2$ in future how much will you consume today
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
QUARTERLY
LSE logo 1272
JOURNAL
State-Dependent Preferences and Habit Formation
OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
A simplified model of rational addiction
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a • Implied price
distinct visual identity for the School. The logo should be used on all School publications and
elasticities given
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
(0.306) (1.664)
The abbreviated version is the square block with the letters LSE (fig 4).
(0.050)
(0.306) (1.664)
(0.226)
price
(0.050)
elasticity
(0.226)
[20.803] [21.502] [20.347]
[20.803] [21.502]
[20.113] -0.35
[20.347] (interpret?)
[20.113]
Enacted
2.307rate 2.307
20.344 20.344
(1.066) (1.066)
(0.142)
• But most of this
(0.142)
[0.232] [20.181]
[0.232] is result of future
[20.181]
e Effective
4.001rate 1
4.001
20.118 prices 20.118
(22)(1.330) (1.330)
(0.180) (0.180)
[0.402] [20.062]
[0.402] • Including future
[20.062]
bs 8678 Number
8675 of obs 4342
8678 all similar4341 8675
4341 4342
prices,
re from regression of consumption
Coefficients
on listedare
variables,
from regression
as well asofaconsumption
full set of dummies coefficients
on listedforvariables, as well as a full set of dummies for
and calendar month of data.
state
Standard
of residence
errorsand
are calendar
in parentheses;
month implied
of data. price
Standard
elasticities
errors are in parentheses; implied price elasticities
ckets. Regressions for aggregate
are inpacks/capita
square brackets.
data are
Regressions
in the first
fortwo
aggregate
columns; regressionsdata are in(though
packs/capita only regressions
the first two columns; next
ette consumption data are forin the
natality
secondcigarette
two columns.
consumption
All regressions
data are in exclude
the second
monthtwoof columns. All regressions exclude month of
increase and month that itenactment
is effective.of tax increase and month that it is effective. month’s price
Fig 1
significant) Fig 1 Full LSE logo in colour
11
(monthly) relationship
frequency
Fig 2 between
(monthly)
x changes
relationship
in smoking
between changes in smoking
x
Fig 2 LSE logo – clear space
L S THE ONDON CHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
E OF CONOMICS AND
at any size
State-Dependent Preferences and Habit Formation
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
State-Dependent Preferences and Habit Formation
• Her perceived utility from hitting is:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
∑
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print. ∞
1
ȳ −
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
Ũ (hit|s0 ) = δ j pj +
around the logo is shown above, and defines an area into which nothing should intrude.
1−δ
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for j=0 only change is
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
wrong
∞
∑ ∞
∑
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo. initial state
(1 − α) (ϕa + (ϕas − ϕs )sj ) + α δ (ϕa + (ϕas − ϕs )s0 )
j
The abbreviated version is the square block with the letters LSE (fig 4).
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Positive Habits
• We have argued that projection bias makes people too
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
a good one
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• How can this design test: H0 : “exercise is not >> DO THEY KEEP GOING
habit-forming” against HA : “exercise is habit-forming”?
What we need is EXO VARIATION in Ct-1 as Ct-1 tends to be ENDO. Eg. milk
Fig 1
yesterday milk today cos this pers likes milk (OLS invalid)
Fig 1 Full LSE logo in colour
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Exercise Habits
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
Funny: BD discounters play catchup at end of
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
month to get the $100 LOL
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
(a) Study 1
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias and Exercise Habits
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
undergraduates
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
designated week
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
• Like a negative per-use fee in DellaVigna-Malmendier,
problem set Plays same role as P in prev model
RECALL - LT1 finding SUPPLY SIDE cost of going to gym
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
LSE logo
Projection Bias and Exercise Habits
• A habituated subject thinks she will go if:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
p + η + β̂b − c − ε ≥ 0
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
[ ∫ ] ∫
graphic elements used with it (full bleed pictures are the only exception).
∞
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
c−η−β̂b
7×
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo. pdF (ε) + 7 × (b − c + ε)dF (ε)
The abbreviated version is the square block with the letters LSE (fig 4).
c−η−β̂b−p c−η−β̂b−p
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
44 4
4
(0.057) (0.196)
4
[0.477]a
Treatment Period X Treated 1.209⇤⇤⇤ 1.275⇤⇤⇤
33 3
3
(0.150) (0.181)
3
Actual Attendance
1 Actual Attendance
Attendance [0.780]a
Actual Attendance
ActualAttendance
Imm. Post-Treatment X Treatedb 0.256⇤⇤ 0.585⇤⇤⇤
22 2
2
(0.122) (0.217) replicate research
2
[0.186]a
Actual
1
(0.098)
Complied w/ treatment 0.057
• Treatment effect 0.338 after accounting (0.071) for
1.582⇤⇤⇤
00 0
5 5 0 Predicted Attendance
0 Predicted Attendance 1 1
55 5 00 Predicted
(0.180)
0Attendance 11 1
Predicted
b
Predicted Attendance
Attendance ⇤⇤
Imm. Post-Treatment X Compliance
Control Subjects: 0.338
Control Subjects:
• No evidence of persistence after
ControlSubjects:
Control Subjects: winter
Control Difference
Subjects:
(0.154) < 1 holiday
Difference < 1 (is this
Treated
b Subjects
Difference
Subjects <<1
TreatedDifference Difference
1 <1
good or bad?) x Compliance
Later Post-Treatment TreatedSubjects
Treated Subjects 0.061 < 1 Difference < 1
TreatedDifference
Subjects
(0.126) <<1Difference
Difference
Difference 1 <1
Notes: Average
Notes: weekly
Averagegymweekly
attendance
gym attendance
in the 8 weeks in the
following
8 weeksthe following
treatment themonth
treatment plotted
month against
plotted against
Notes: Average
Notes:
predicted Average
Notes:Weekweekly
Average
E↵fects
weekly
attendance
predicted gym
gymweekly
attendance attendance
gym
attendance
conditional attendance
in the
in
conditional
on receiving the
on88noweeks
intreatment.
weeks thefollowing
Yes
receiving following
8 weeks
noYes following
the treatment
the treatment
treatment.
Weeks inYes the
whichtreatment
Weeks month
month
a in
subjectplotted
month
plotted
which against
plotted
against
received
a subject againsta
a received
Fig 1
predicted
predicted Controlsattendance
predicted
attendance
attendance conditional
conditional conditional
on
on receiving
receivingon no Yes
receiving
no treatment.
no
treatment. Yes
treatment.
Weeks
Weeks in
in –Weeks
which
which in
aa subject
which
subject a
Fig 1 Full LSE logo in colour
received
subject
received received
a
a a
p-coupon for p-coupon
attendancefor attendance
are omittedare fromomitted
this calculation.
from this calculation.
Predicted attendance
Predicted attendance
is based on is anbased
OLS on an OLS
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
p-coupon
p-coupon for IV
p-coupon
for attendance
for
attendance attendance
are
are omitted
omittedare from
omitted
from this
this from –this calculation.
calculation.
calculation. Yes
Predicted
Predicted –
Predicted
attendance
attendance attendance
is
is based
based on
is
on based
an
an OLS
OLS on an OLS
regression ofregression
attendance of attendance
Observations on week dummies
on weekand dummies
covariates
7433 andusing
covariates
7433 control using
group
1520 control
data group
for all data
weeksforandall weeks and
regression
regression
treated regression
of attendance
of
group attendance
treated
data of the
group
for attendance
on
on week
week
data dummies
on week
dummies
pre-treatment
for the dummies
and covariates
and
pre-treatment
period. covariates
and covariates
period. using
using control
using
control group
control
group data
datagroupfor all
for all
dataweeks
weeksfor all
and
and
22weeks and
treated group Num
treated dataClusters
group
for the
datapre-treatment
for the pre-treatment
period. 111
period. 111 80
Fig 2
x treated groupR-squared
data for the pre-treatment period. 0.21
x
0.22 0.13
Fig 2 LSE logo – clear space
THELONDON Notes:
SCHOOL lettering and the edge of the red square.
Observations of weekly attendance at the subject-week level. Robust standard er-
This applies to the reproduction of the logo
POLITICAL SCIENCE in
rors parentheses, clustered by individual. ⇤ significant at 10%; ⇤⇤ significant at 5%; ⇤⇤⇤
The clear space is indicated by the blue line.
Nothing must enter this area.
The clear space must continue around any
x
significant at 1%. a Terms in square brackets are p-values from a Chow test of equal coef-
element (eg text, sub logos) attached to
x x the LSE square
Figure 5: Figure
Predicted
5: Predicted
versus Actual
versus
Attendance
Actual Attendance
ficients between our sample (column 1) and Charness and Gneezy (2009)’s sample. b Imm.
Figure 5:
Figure 5:
Figure
Predicted
5: Predicted
Predicted versus Actual
versus Actual
versus Attendance
Attendance
Actual Attendance
Post-Treatment refers to the 8 weeks following the intervention (excluding the bu↵er week
LSE logo
Projection Bias and Exercise Habits for columns
following semester
Predicted
(1) and (2). Predicted
Predicted
Predicted
andPost-Treatment
Later
Predicted
and
and
(excluding
Actual
Actual
andTarget-
Actual
andbreak).
the Actual
semester Target-
Week
Target-
refers to the
Actual Target-
Target-
Attendance
19 weeks ofWeek
Week Attendance
Week Attendance
Attendance
observations
Week Attendance
in the
Control Control Treated Treated
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a Control
Control Control Treated
Treated Treated
distinct visual identity for the School. The logo should be used on all School publications and
44 4
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
33 3
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
week
around the logo is shown above, and defines an area into which nothing should intrude. 37
3
week
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
per week
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
Visits per
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Visits per
22 2
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
2
Also you can use either the abbreviated or full version of the logo.
Visits
The abbreviated version is the square block with the letters LSE (fig 4).
1
1
00 0
p=0
p=0 p=0
1 p>0
p>0 p>0 p=0
p=0 p=0 p>0
p>0 p>0
Un-incentivized
Un-incentivized
Predictions: Predictions:
Un-incentivized
Un-incentivized
Un-incentivized Predictions:
Predictions:Post-treatment
Predictions:
Pre-treatment Post-treatment
Pre-treatment Actual attendance
Actual attendance
Pre-treatment
Pre-treatment Post-treatment
Pre-treatment Post-treatment
Post-treatment Actual attendance
Actual attendance
Actual attendance
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Fig 1
Panel B: Extended Parameters
Fig 1 Full LSE logo in colour
LSE logo
Projection Bias and Positive Habits
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
state?
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
42
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
25
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias Outside the Lab: Catalog Sales
• Conlin, O’Donoghue, and Vogelsang (2007): does
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
decision:
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web. • t = 0, 1, 2
Also you can use either the abbreviated or full version of the logo.
• Weather ωt ∼ H, iid
The abbreviated version is the square block with the letters LSE (fig 4).
t=0 Don’t
0 • Value of item
ω0 realised
v(X, ε, ω2 ) =
Purchase (X ′ β + ε)u(ω2 )
1
depends on individual
t=1 Return
characteristic X,
−c individual shock ε,
ε, ω1 realised
future weather ω2
Keep
• Decide whether to
t=2 purchase at price p in
Fig 1
v(X, ε, ω2 ) − p Fig 1 Full LSE logo in colour
period 0, to return at
cost c in period 1 2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• Biased agent:
ŨR = EH [v(Xi , εi , ω2 |ω1 )|Xi , ε2 ]
= [Xi′ β + εi ] · [(1 − α)EH (ω2 ) + αu(ω1 )]
Return iff ŨR − p < −c
p−c
⇐⇒ εi < − Xi′ β ≡ Λ̃(ω1 )
[(1 − α)EH (u(ω2 )) + αu(ω1 )]
careful
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias Outside the Lab: Catalog Sales
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
+ P r(εi ≥ Λ̃(ω0 ))
The abbreviated version is the square block with the letters LSE (fig 4).
[ ]
′
× (Xi β + E[ε|ε > Λ̃(ω0 )] [(1−α)E[u(ω2 )] + αu(ω0 )]
⇐⇒ Xi β > g(ω0 , α)
1
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Projection Bias Outside the Lab: Catalog Sales
Results
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Fig 1
Panel B: Extended Parameters
Fig 1 Full LSE logo in colour
OF E CONOMICS AND
at any size
⇤⇤⇤
POLITICAL SCIENCE significant at 1%. Parameters in Panel B are calculated by transformations of
The clear space is indicated by the blue line.
Nothing must enter this area.
The clear space must continue around any
x x
x
parameters in Panel A, with standard errors implied by the delta rule. Model 2
element (eg text, sub logos) attached to
the LSE square
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
42
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Heuristics
Some Examples Mercilessly Stolen from Kahneman (2011)
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
endangered species?
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Availability Heuristic
• Which kills more people in the US annually (Combs &
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
Slovic, 1979):
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
% Choosing Actual Media Reports
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
1b Vehicle Accidents
The abbreviated version is the square block with the letters LSE (fig 4).
2a. Emphysema
2b. Homicide
• Under the availability heuristic, people assess the 1
Fig 1
• Homicides are more salient (and media-hyped). How does Fig 1 Full LSE logo in colour
this affect allocation of public resources? possible. The Pantone reference is PMS 485
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Availability Heuristic
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
• Ease of recall:
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
• Egocentrism:
• Ross and Sicoly (1979) asked married couples to separately
estimate their own contribution to 20 household activities
• If subjects agree (or are at least unbiased), estimated 1
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• Salience:
• Steinbrugge et al. (1969) show that demand for
earthquake insurance increases after an earthquake, then
subsides over time.
• Eisner and Strotz (1961) find the following WTP for flight
insurance:
1 Coverage against any act of terrorism: $14.12
2 Coverage against mechanical failure: $10.31
3 Coverage against any cause: $12.03
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Anchoring-Adjustment Heuristic
• People often make estimates starting from some initial
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
value.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
THE
OF
LONDON SCHOOL
E CONOMICS AND
• For subjects who spun 65, median estimate is 45%
lettering and the edge of the red square.
This applies to the reproduction of the logo
at any size
Anchoring-Adjustment Heuristic
• Bruner & Potter asked subjects to identify pictures being
gradually brought into focus
• Group 1: Begin moderately blurred, end slightly blurred.
• Group 2: Begin severely blurred, end slightly blurred.
• 50.7% of Group 1 correctly identify, but only 25.0% of
Group 2
• People anchor on some initial guess, and partially adjust.
More blurred initially means worse initial guess.
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Other Heuristics
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
• Hindsight Bias
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
• Events which have occurred are subsequently judged to
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
• Curse of Knowledge
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness Heuristic
• This insensitivity has its own name: base-rate neglect
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness Heuristic
• Consider the following example:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
An urn is filled with either 2/3 red and 1/3 green balls, or 1/3
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness Heuristic
Bill is 34 years old. He is intelligent, but unimaginative,
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
humanities.
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
the middle.
possible. The Pantone reference is PMS 485
24
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness
• How should someone evaluate the likelihood of a
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
hypothesis?
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
P r(ω = ωi ) = π(ωi )
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
∑
The abbreviated version is the square block with the letters LSE (fig 4).
P r(hr ) = π(ωi )
ωi ∈hr
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness
Gennaioli-Shleifer Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
dimensions of a hypothesis:
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
s = {ω ∈ Ω|ωj = ωj′ ∀ j ∈ Fr }
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness
Gennaioli-Shleifer Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
stereotypes:
P r(h ∩ sr )
P˜r(hr ) = (∪ r )
N
1 Pr j=1 (hj ∩ sj )
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness
Gennaioli-Shleifer Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
P˜r(h2 )
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
2/9 4
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Fig 1
• What about h′1 “Linda is a Feminist” vs. h′2 “Linda is a Fig 1 Full LSE logo in colour
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness
Gennaioli-Shleifer Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness in Sequences
• Judgment by Representativeness: “the probability that
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
numbers’
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
3 H-H-H-H-T-H
• KT 1972 show that most subjects rank 1 as most likely, 3
as least likely.
• Intuitively, a fair coin “should” have about half heads, half
tails. Streaks don’t feel right.
Fig 1 Fig 1 Full LSE logo in colour
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Evidence for the Gambler’s Fallacy
• A quick browse on the internet reveals the following
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
Due number. ’
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
• ‘Consecutive sets of numbers at the beginning and ending
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Number Mean
The full LSE logo should be used whereverAverage payouts to winning numbers
possible. The Pantone reference is PMS 485
• Results:
• 5/29 (17%) of ‘red’ subjects chose risky option
• 22/30 (73%) of ‘black’ subjects chose risky option
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The Hot-Hand Fallacy
• People also believe in what appears superficially to be the
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
autocorrelation
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
negative
Fig 1
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Representativeness and The Law of Small Numbers
• Representativeness can explain these two seemingly
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
different biases
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
(Gambler’s Fallacy)
• With unknown process, belief in positive autocorrelation
(Hot-Hand Fallacy)
1
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in The Law of Small Numbers
Rabin 2002 Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
signals
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Completing the Model
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
• Rather than letting him run out of balls, Rabin extends the
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
model:
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Overinference
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Overinference
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
observes aa
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Overinference
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
2 6 4
1
⇒ q̃ =
2
• Confirm that q̃ also matches mixed and bb frequencies
• Even if all Helgas are mediocre, Freddy infers that half are
good and half are bad (and none are mediocre!) Fig 1 Full LSE logo in colour
Fig 1
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
β
• P˜r(gg|α, β) = 12 α + 16 (1 − α − β) + 0β = 1
6 − 6 + α
3
β
• Similarly, P˜r(bb|α, β) = 1
6 − α
6 + 3
β
• And P˜r(gb ∪ bg|α, β) = 2
3 − α
6 − 6
Fig 1 Fig 1 Full LSE logo in colour
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
General overinference
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
∂ 2 2 1
= − − =0
∂β 1 − α + 2β 4 − α − β 1 − β + 2α
• Is there a solution with symmetric beliefs α = β?
• Take either FOC, find α = β = 1/2, as before.
Fig 1 Fig 1 Full LSE logo in colour
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Overinference
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
• Proposition
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
If π is symmetric and π(θ = 1) < 1/2, then for any N < ∞, there is
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
in too much variation in Helgas’ abilities Fig 1 Full LSE logo in colour
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Hot-Hand
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Belief in the Law of Small Numbers
Hot-Hand
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
e who tied.
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
After four 2
um of his
Fig 2
x x
THELONDON SCHOOL
x
Fig 2 LSE logo – clear space
ional fixed
This applies to the reproduction of the logo
OF E CONOMICS AND
at any size
y $3) for x x
element (eg text, sub logos) attached to
the LSE square
about 45 0 10 20 30 40 50 60 70 80 90 100
Evidence on Dominance-Solvable
eriod. LSE logo ChosenNumbers Games
Nagel
IL (AER 1995) first-round choices, p=2/3:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
lts The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
01-B.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
median33
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
gel (1993)
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
mean 36.73
uthor upon
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
parametric
Also you can use either the abbreviated or full version of the logo.
, 0.10-
0.00
The abbreviated version is the square block with the letters LSE (fig 4).
ahl (1994)
o
a and con-
X 0.05-
1
quencies of
alue of p, 0 10 20 30 40 50 60 70 80 90 100
Chosen Numbers
ns are also
hoices are
Fig 1 Fig 1 Full LSE logo in colour
2A,and "/2
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
0.15
e numbers C.
median 66 3
10 percent
Fig 2
x x
x
Fig 2 LSE logo – clear space
ently
an fromwe make
the other use of x
news- Fact x0.04
0.02 xNewspaper experiments
The clear space around the logo must be
equal to the space between the LSE
re-
dments received
mentioning thatfor onlythese one experiments. sultTHE
0.00 inLsimilar
ONDONSubsquently frequencydistributions.
SCHOOL we make useInofpartic- the
lettering and the edge of the red square.
This applies to the reproduction of the logo
Fact 1: The three Newspaper experiments re-
ould be accepted. In fact, large ular, number
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5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Evidence on~~~~~~~~~~~~~~~~~~~~~~~~~~~+
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in Second
colour Choices in Third Period
VER TIME FOR SESSIONS 1-3 FIGURE 4. The full LSE logo should be used wherever
OBSERVATIONS OVER TIME FORpossible.
SESSIONs 4-7is PMS 485
The Pantone reference
FIGURE 3. OBSERVATIONS OVER TIME FOR SESSIONS 1-3
7 FIGURE 4. OBSERVATIONS OVER TIME FOR SESSIONs 4-7
N FRom FIRST TO SECOND (p 4): A) TRANSITION FROm FIRST TO SECOND
= A/): A) TRANSITION FRom FIRST TO SECOND 7
100-i To THIRD PERIOD;
M SECOND (p 100-
PERIOD; B) TRANSITION FROM SECOND To THIRD PERIOD; (p 4): A) TRANSITION FROm FIRST TO SECOND
C. + B) C.
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THIRD To90- FoURTH PERIOD
C) TRANSITION FROm THIRD To FoURTH PERIOD C) TRANSITION FROm THIRD To FoURTH PERIOD 6
80- 80-
Fig 2 Fig 2 LSE logo – clear space
o0 x x 0
070 c The clear space around the logo must be
x 70Q equal to the space between the LSE
bvious
OF E CONOMICS AND down again] or wrote that the split prize was at any size
best reply in the 1/2 and 2Asessions, given the
50- right answer.) actual strategies.
POLITICAL SCIENCE Instead
LO 0 the
50 best reply is a The clear space is indicated by the blue line.
0
ess toward the equilibri- too small
0L
C to state+ the obvious right answer.) Nothing must enter this area.
actual strategies. Instead the best reply is a
40- moving target that xapproaches 0. The adjust- The clear space must continue around any
The40-
element (eg text, sub logos) attached to
ssions
x x adjustment process towardthe equilibri- the LSE square
moving target that approaches 0. The adjust-
5 30is quite different ment process is thus more complicated. Com-
sions. 20- Zero is never the ums~~~~~~~~~~~~~~~~~~~
in 30-
the 1/2 and 2A3sessions is quite different ment process is thus more complicated. Com-
paring Figures 3 and 4, one can +++see that the
from ~~~~~~~~~~~~~~~~20-
that in the 4/3 sessions. Zero is never the paring Figures 3 and 4, one can see that the
10- 10- + ++
PERIOD; B) TRANSITION
This content The
C) TRANSITION
LSE logo is FROM
downloaded
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7 Feb
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FoURTH PERIOD on Thu, 7 Feb 2013 06:32:06 AM
All use subject to JSTOR Terms and Conditions downloaded
treatment, (b) just whether won or not, (c) no feedback.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
All use subject to JSTOR Terms and Conditions
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
7
Fig 2
x x
Fig 2 LSE logo – clear space
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Level-k model
• Our goal is to relax (2) and (3), but keep (1)
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Level-k model
• When is level-k different from Nash?
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
anyway
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
converge as k grows
• In 2-player games, rationalizability and dominance coincide
(more generally, rationalizable ⊂ IDSDS)
• If only one strategy survives IDSDS, it will also be Nash
• If IDSDS takes1
k rounds to find unique strategy, level-k and
up will play it
• Thus level-k will yield novel predictions when:
• The game is IDSDS-solvable, but only after many rounds
(beauty contest)
• The game has multiple Nash equilibria
Fig 1 Fig 1 Full LSE logo in colour
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Incomplete Iterated Dominance
• A different plausible model of thinking in these beauty
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
and best-respond.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
2
· 50 = 33.3)
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
(In beauty contest, play
You can use the square element of the logo either as white lettering on red, PMS 485, or white 3
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
• D1: Eliminate any strictly dominated strategies and
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
assume others play conditionally randomly.
(a > 100p clearly dominated, so others randomising on [0,
66]. Play 32 66
2 = 22)
• D2: Iterate deletion, and assume others play conditionally
randomly. 1
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Level-k and Costa-Gomes Crawford
• CGC estimate frequencies of types based on play in
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
several
VOL. 96 NO. 5 games:
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
COSTA-GOMES AND CRAWFORD: COGNITION AND BEHAVIOR
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
1741
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print. T
ABLE 1—SUMMARY OF BASELINE AND OB SUBJECTS’ ESTIMATED TYPE DISTRIBUTIONS
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
Econometric from
graphic elements used with it (full bleed pictures are the only exception). Apparent Econometric Econometric from Econometric from guesses and
You can use the square element of the logo either as white lettering on red, PMS 485, or white from from guesses, guesses, with search, with
Type
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS fileguesses
is for guesses excluding random specification test specification test
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
L1 20 43 37 27 29
Also you can use either the abbreviated or full version of the logo.
L2 12 20 20 17 14
The abbreviated version is the square block with the letters LSE (fig 4).
L3 3 3 3 1 1
D1 0 5 3 1 0
D2 0 0 0 0 0
Eq. 8 14 13 11 10
Soph. 0 3 2 1 1
Unclassified 45 0 10 30 33
Note: The far-right-hand column includes 17 OB subjects classified by their econometric-from-guesses type estimates.
• Level-k
Sophisticated explains most
subjects (Table 1). behaviour
It also sup- –using
subjects’ types almost nobody
search as well as guesses. is doing
1
ports our a priori specification of possible types Taking both into account, 55 of 88 subjects are
D-k
by giving no indication of significant numbers reliably identified as one of our types, 45 of
of SW’s Worldly type or any other type omitted them non-Equilibrium (Table 1). This analysis
• Eq. are
from our players who jump to
specification. Nash
reaffirms equilibrium
the absence of ofgame
of significant numbers
Information search adds another dimension types other than L1, L2, Equilibrium, or hybrids
These players do not doofparticularly
• econometric analysis.5 Following CGCB,
to our well,
L3 and/or Equilibrium. given
These results Lk and Dk
are con-
we link search to guesses by taking a procedural sistent with previous analyses, but significantly
Soph. are best-responding
view• of decision-making, in which a subject’s refine to actual
and sharpen distribution, and are
them.
type determines his search and guess, possibly Thus, to the extent that our subjects’ devia-
rare
with error. Each of our types is naturally asso- tions from equilibrium can be predicted, they
ciated with algorithms that process information appear to be based almost entirely on level-k
Fig 1
about targets and limits into decisions. We use Fig 1 Full LSE logo in colour
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Level-k and stag hunt
• Consider the following n-player stag hunt:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Level-0 randomise
• Level-1: Stag iff X · (0.5)n > 1 ⇐⇒ X > 2n
• Level-2: Stag iff L1 plays stag ⇐⇒ X > 2n
• Intuitive result: given x, as group size increases less likely
to coordinate on Stag equilibrium
Fig 1 Fig 1 Full LSE logo in colour
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Cognitive Hierarchy
An Extensive-Form Game
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
• 4 rounds; either take 80% of pie or pass and let pie double
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
P 1a
Also you can use either the abbreviated or full version of the logo.
P 2a P 1b P 2b
The abbreviated version is the square block with the letters LSE (fig 4). (6.4x, 1.6x)
pass pass pass pass
1
(0.4x, 0.1x) (0.2x, 0.8x) (1.6x, 0.4x) (0.8x, 3.2x)
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• Level-0: randomise
• Level-1:
• 2b: Take.
• 1b: u(take) = 1.6; u(pass) = (.5)(6.4) + (.5)(.8) = 3.6. Pass.
• 2a: u(take) = 0.8; u(pass) = (.5)(.4) + (.5)(3.2) = 1.8. Pass.
• 1a: u(take) = 0.4; u(pass) = (.5)(.2) + (.5)(3.6) = 1.9. Pass.
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Cognitive Hierarchy
• Level-2 realises there are more than one type of player,
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• 2a : }
u(take) = 0.8
⇒ Pass
u(pass) = (1/5)[(.5)(.4) + (.5)(3.2)] + (4/5)[3.2] = 2.92
• 1a }
u(take) = 0.4
⇒ Pass
u(pass) = (1/3)[(.5)(.2) + (.5)(1.6)] + (2/3)[1.6] = 1.37
Fig 1 Fig 1 Full LSE logo in colour
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
How well do players do?
885
Schelling, 1960: “AAnormative
COGNITIVE HIERARCHY MODEL
theory must produce strategies
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
Observed payoff
Also you can use either the abbreviated or full version of the logo.
195 586 264 328 118
The abbreviated version is the square block with the letters LSE (fig 4).
Clairvoyance payoff 243 664 306 708 176
Economic value
Downloaded from http://qje.oxfordjournals.org/ at London Sc
Clairvoyance 48 78 42 380 58
Cognitive hierarchy
(Common !) 13 55 22 132 10
Nash equilibrium 5 30 15 "17 2
% Maximum economic
1
value achieved
Cognitive hierarchy
(Common !) 26% 71% 52% 35% 17%
Nash equilibrium 10% 39% 35% "4% 3%
The economic value is the total value (in experimental payoffs) of all rounds that a “hypothetical” subject
will earn using the respective model to predict other’s behavior and best responds with the strategy that
yields the highest expected payoff in each round.
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
OF E CONOMICS AND
at any size
When do irrational players matter?
• A (facile) criticism of behavioural game theoretic models is
that irrational players will not long survive in the market
• In some contexts, they may earn higher payoffs than fully
rational agents
• Previous slide, CH can out-perform naive Nash in many
games
• Also possible to out-perform ‘worldly’ Nash when strategic
value
• e.g. 2-person second-price auction; 1 fully rational agent,
one ‘behavioural’ who always gives maximum possible bid
• Rational agent can never win, so ∃ equilibrium where
irrational gets item for minimum price
• More importantly, they may substantially alter the
equilibrium while they are present
• Consider basic [0,100] beauty contest with p = 0.99999
• If all players are Nash, then unique equilibrium is 0 as usual
• If fraction ϵ of players are L0, then:
xr = 0.9999[(1 − ε)xr + ε(50)] ≈ 50 Fig 1 Full LSE logo in colour
Fig 1
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
24
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Setup
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Key features:
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
either:
1 Purchase an add-on from the same firm
2 Take a (costly) avoidance action
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Evidence on Inattention
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
equivalent to prices
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Evidence on Inattention
Table 3— Effect of Posting Tax-Inclusive Prices: DDD Analysis of Mean Quantity Sold
Notes: Each cell shows mean quantity sold per category per week, for various subsets of the sample. Standard errors
• No decrease
(clustered by week) in in treated
parentheses, vs. untreated
number of observations categories
in square brackets. Experimental period spans week 8 inin control
2006 to week 10 in 2006. Baseline period spans week 1 in 2005 to week 6 in 2006. Lower panel reflects averages across
the two control stores.
stores (-0.06); big decrease in treated ones
• Difference-in-difference-in-difference: -2.2 All
labelled on the axes, along with the standard error and the number of observations. items
standard (≈ 8%)
errors reported in this and subsequent tables in this section are clustered by week to adjust for
sold in treated
correlation vs products.
of errors across untreated categories, in treated vs. 10
The mean quantity sold in the treatment categories fell by an average of 1.30 units per
Fig 1
untreated
week duringstores, inperiod
the experimental pre- vs.to theexperimental
relative periods
preperiod baseline. Meanwhile,
Fig 1 Full LSE logo in colour quantity
sold in the control categories within the treatment store went up by 0.84 units. Hence, sales
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
fell in the treatment categories relative to the control categories by 2.14 units on average, with
a standard error of 0.68. This change of DDTS = −2.14 units is the “within-treatment store”
difference-in-differences estimate of the impact of posting tax-inclusive prices. The identifica- 6
Fig 2
x x
tion assumption necessary for consistency of DDTS is the standard “common trends” condition
Fig 2 LSE logo – clear space
(Bruce D. Meyer 1995), which in this case requires that sales of the treatment and control prod-
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
ucts would have evolved similarly absent our intervention.
This applies to the reproduction of the logo
at any size
change in sales of treatment and control products in the control stores, where no intervention
The clear space must continue around any
x
element (eg text, sub logos) attached to
x x the LSE square
took place. The lower panel of Table 3 presents such a comparison. In the control stores, sales of
Tableby4—Effect
treatment products increased of insignificant)
a (statistically Posting Tax-Inclusive Prices:
DDCS = 0.06 units Regression
relative to sales Estimates
of control products. The fact that DDCSTHE
1156 is notAMERICAN
significantly different
ECONOMIC from zero suggests that sales
REVIEW SEPTEMBER 2009
Quantity per Revenue per Log quantity per Quantity per Quantity (treat.
Shrouded Attributes category category ($) category category categories only)
LSE logo week throughoutvariable
Dependent (1) Posting Tax-Inclusive(2) Prices:(3)
the analysis reported in the paper. However, none of the results is affected by extending the preperiod
to include this week. Table 4—Effect of Regression (4)
Estimates (5)
Evidence on Inattention Standard errors are similar when we cluster by−2.20
10 to create a
Treatment
The LSE logo is the School’s main marketing and publicity symbol, and is designed category to adjust for−13.12
serial correlation. −0.101 −2.27 −1.55
(0.60) per (4.89)per Log quantity
(0.03) per Quantity (0.60) per Quantity (0.35)(treat.
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised. Quantity Revenue
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
category category ($) category category categories only)
tempted to draw a box around the full logo, but use the form shown here.
Average
Dependent price
variable −3.15
(1) −3.24
(2) (3) −3.04
(4) −15.06
(5)
(0.26) (1.74) (0.25) (3.55)
To ensure high quality reproduction, you should always use the master artwork from disk.
Average price
−1.59
graphic elements used with it (full bleed pictures are the only exception).
(0.11)
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Average price squared 0.05 0.06 0.05 1.24
−0.21
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Before treatment
(0.00) (0.03) (0.00) (0.34)
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
(1.07)
Log average price −1.59
After treatment 0.20
(0.11)
(0.78)
Before treatment −0.21
Category, store, week FEs x x x x x
(1.07)
After treatment
Sample size 19,764 19,764 18,827 0.20
21,060 2,379
(0.78)
• Decrease in demand leads to ≈ 10% lower revenue when
Category,
Notes: Standard errors,FEs
store, week clustered
1 by week,x reported in parentheses.
x All columns
x report estimates x of the linear regression
x
model specified in equation (4). Quantity and revenue reflect total sales of products within a given category per week in
taxes are made salient each
Sample store. sizeAverage price is a weighted average of the prices
19,764 19,764of the products for sale in each
18,827
ket of products (weighted by total quantity sold) over time. In column 3, observations are weighted by total revenue by
category using a2,379
21,060 fixed bas-
tion, we weight each observation by the mean revenue over time by category by store, placing
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
greater weight on the larger categories as in the levels regressions. The log specification is per-
haps a better model
In specification 3, for
we comparisons across categories
estimate an analogous model inwith
logsdifferent
instead ofbaseline quantities,
levels. In but
7 it
this specifica-
Fig 2
x x
forces us weight
tion, we to omiteach
observations that by
observation havethezero quantity
mean sold.
revenue It yields
over a slightly
time by
Fig 2 LSE logo – clear space
larger
category estimate
by store, than
placing
(10.1
The clear space around the logo must be
x equal to the space between the LSE
THE
OF
the
LONDON SCHOOL
E CONOMICS AND
levels
greater model
weight onfor
thethe reduction
larger in
categories quantity
as in sold
the levels percent).
regressions.
lettering and the edge of the red square.
This applies to the reproduction of the logo
at any size
The
The estimated
log category-level
specification is per-
Shrouded Attributes
• Consider a one shot game with:
• N symmetric firms {1, ..., N } producing a homogeneous
good
• A mass 1 − α < 1 sophisticated consumers
• A mass α > 0 of naive (“myopic”) consumers
• Timing:
(1) Period 1:
• Firms choose to “shroud” or “unshroud” their good:
si ∈ {0, 1}; no direct cost of this decision
• Firms choose prices pi for base good, p̂i ≤ p̄ for add-on
(2) Period 2: Consumers choose a firm ∈ {1, ..., N } ∪ {∅} and
a costly avoidance effort a ∈ {0, 1} (at cost e ≥ 0)
• Sophisticates form Bayesian posteriors about shrouded
add-ons, and choose both a firm and avoidance optimally.
• If no firm un-shrouds, naives choose firm using only p; a = 0
• If some firm un-shrouds, fraction λ ∈ (0, 1] of naives
become sophisticated
(3) Period 3: Consumers who chose a firm i ̸= ∅ in period 2
purchase add-on at p̂i iff a = 0 Fig 1 Full LSE logo in colour
Fig 1
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
Uai = v − pi + εai ,
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• Takeaways:
• A firm’s demand has average consumer surplus (p∗ − pi )
as its argument
• The ratio D(0)/D ′ (0) ≡ µ indexes firms’ market power, and
will be useful later
Fig 1 Fig 1 Full LSE logo in colour
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
surplus
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• Thus only naives (α) will purchase the add-on The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Equilibrium
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Thus if firm i shrouds and chooses p, p̂, its profits will be:
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
π(p) = (p + αp̄)D(p∗ − p)
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
FOC: p = µ − e
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Equilibrium
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Equilibrium
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
sophsiticates
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
Proposition 1
• The sophisticates enjoy the loss leader which is subsidized
by naives, but then avoids the add-on by paying e (c.f.
credit card “deadbeats”)
1
• Sophisticates have a strict incentive not to cause
un-shrouding
• Note: firms would want to tie consumers in to their
add-on if possible
• e.g. printers with proprietary chips in ink refills
• An unavoidable cost is a surcharge, which will look different
from an add-on in equilibrium
Fig 1 Fig 1 Full LSE logo in colour
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Equilibrium
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Evidence
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Under shrouding,
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
increasing shipping
suitable for print.
SHROUDED
It is important to keep the LSE logo clear from any other graphics. ATTRIBUTES
The minimum clear spaceAND INFORMATION
around the logo is shown above, and defines an area into which nothing should intrude.
SUPPRESSION 873 charge whilst lowering
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception). TABLE IV
REGRESSIONS OF TOTAL AUCTION REVENUE FOR IPOD AND COIN AUCTIONS
You can use the square element of the logo either as white lettering on red, PMS 485, or white
opening price strictly
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
iPods
(EUR)
Gold coins
(USD)
Silver coins
(USD)
increases total revenue
Also you can use either the abbreviated or full version of the logo.
β1 shipping charge
Coefficient estimates
The abbreviated version is the square block with the letters LSE (fig 4).
charges”
Fig 1
price raises revenue. When shipping charges are disclosed, we The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
can reject the null hypothesis for silver coins, but not for other
items. In all cases, increasing shipping by a dollar while holding
the reserve level constant has a smaller revenue effect when the
shipping charge is disclosed than when it is shrouded.
21
x An average seller benefited from the increased disclosure of
Fig 2 Fig 2 LSE logo – clear space
x
The clear space around the logo must be
shipping charges duexto eBay’s format change. Formally, we reject equal to the space between the LSE
the hypothesis that an average seller earned the same revenue un-
OF E CONOMICS AND
This applies to the reproduction of the logo
at any size
Shrouded Attributes
Extension: Repeated Interactions
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Extension: Repeated Interactions
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
buying it
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
24
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Shrouded Attributes
Extension: Repeated Interactions
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
α≥
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
Tnn p̄
You can use the square element of the logo either as white lettering on red, PMS 485, or white
25
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
26
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
Lecture 9: Behavioural Finance
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Limits to Arbitrage
• Debate about EMH is really debate about role of arbitrage
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
• Example 1: 3Com/Palm
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
• March 2, 2000: 3Com sells 5% of Palm, all 3Com
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
EMH I: Predictable Excess Returns
• Fama, (1969): “There is no important evidence against the
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
form”
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
that is available?
• Consumption of certain goods (e.g. nappies, university
textbooks, care homes) is predictable based on 1
demographic characteristics
• So demand for these products is forecastable based on
demographic trends.
• Investors should price changes in demand due to
demographics, eliminate excess returns
Fig 1 Fig 1 Full LSE logo in colour
5
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
EMH II: The Volatility Puzzle
• Shiller (1981) shows that equity
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
calculate p∗t
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
expectation of ex-post:
pt = Et [p∗t ]
• Not perfect, so prediction error
is: ut = p∗t − pt 1
• But this means:
var(ut ) + var(pt ) = var(p∗t )
• Variance of prices must be less
than variance of ex-post
discounted dividends
Fig 1 Fig 1 Full LSE logo in colour
7
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The Disposition Effect
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
√
• U (sellA) = v(64) + 1/2v(14) + 1/2v(−100) = 8 + 14
2 − 10
• U (sellB)
√
= v(−50) + 1/2v(128) + 1/2v(14) ≈
−14 + 14
2 + 5.65 < U (sellA)
• Odean focuses on loss aversion, but diminishing
sensitivity also relevant (c.f. longshot bias)
Fig 1 Fig 1 Full LSE logo in colour
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The Disposition Effect
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
• Compute:
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
Realised Gains
= Proportion of Gains Realised (PGR)
Realised Gains + Paper Gains
Realised Losses
= Proportion of Losses Realised (PLR) 1
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
• But across these two: 10 stocks sold, half gainers and half
losers
• Likely that more positions must be liquidated during bad
times (perhaps irrationally)
Fig 1 Are Investors Reluctant to Realize Their Losses?
Fig 1 Full LSE logo in colour
Table I
12
Fig 2
x x PGR and PLR for the Entire Data Set
Fig 2 LSE logo – clear space
This table compares the aggregate Proportion of Gains Realized ~PGR! to the aggregate Pro-
x equal to the space between the LSE
E CONOMICS
portion of Losses Realized ~PLR!, where PGR is the number of realized gains divided by the
at any size
OF AND
The clear space is indicated by the blue line.
POLITICAL SCIENCE Nothing must enter this area.
number of realized gains plus the number of paper ~unrealized! gains, and PLR is the number
The clear space must continue around any
x
element (eg text, sub logos) attached to
x x the LSE square
of realized losses divided by the number of realized losses plus the number of paper ~unrealized!
losses. Realized gains, paper gains, losses, and paper losses are aggregated over time ~1987–
The Disposition Effect
1993! and across all accounts in the data set. PGR and PLR are reported for the entire year, for
LSE logoDecember only, and for January through November. For the entire year there are 13,883 real-
Results
ized gains, 79,658 paper gains, 11,930 realized losses, and 110,348 paper losses. For December
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
there are 866 realized gains, 7,131 paper gains, 1,555 realized losses, and 10,604 paper losses.
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
The t-statistics test the null hypotheses that the differences in proportions are equal to zero
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
assuming that all realized gains, paper gains, realized losses, and paper losses result from
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
independent
• PGR decisions.
systematically higher than PLR on annual basis:
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Entire Year December Jan.–Nov.
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
PLR
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
0.098 0.128 0.094
PGR 0.148 0.108 0.152
Difference in proportions "0.050 0.020 "0.058
t-statistic "35 4.3 "38
There are two hypotheses to be tested. The first is that investors tend to
• Results persist when splitting sample by trading activity,
sell their winners and hold their losers. Stated in terms of realization rates
early/late
for gains and losses this is:
Fig 1
The null hypothesis in this case is that PGR ! PLR. The second hypothesis Fig 1 Full LSE logo in colour
is that in December investors are more willing to sell losers and less willing
The full LSE logo should be used wherever
possible. The Pantone reference is PMS 485
to sell winners than during the rest of the year. That is:
13
OF E CONOMICS AND
at any size
The Disposition Effect
• Alternative Explanations?
• Taxes
• Capital gains/losses taxed only on realisation
• Favors realising losses, keeping gains on paper
1792 The Journal of Finance
• Portfolio Rebalancing
• Would also favour selling Table gains
VI
• Effect persists when Ex Post Returns
looking at liquidating entire portfolio, or
This table compares average returns in excess of the CRSP value-weighted index to stocks that
when no new purchases are made
are sold for a profit ~winning stocks sold! and to stocks that could be, but are not, sold for a loss
• Disposition
~paper losses!. effectover
Returns are measured strongest amongst
the 84, 252, leastdays
and 504 trading sophisticated
subsequent to the
sale of a realized winner
investors and subsequent to days on which sales of other stocks take place in the
portfolio of a paper loser. p-values refer to the frequency with which differences in excess re-
turns Mean
• over reversion
the same periods in the empirical ~bootstrapped! distributions exceed the difference
in excess returns observed could
• Investors in the data.
believe winners will under-perform, losers
over-perform,Performance
except: over Performance over Performance over
Next 84 Next 252 Next 504
Trading Days Trading Days Trading Days
Average excess return on
winning stocks sold 0.0047 0.0235 0.0645
Average excess return on
paper losses !0.0056 !0.0106 0.0287
Difference in excess returns 0.0103 0.0341 0.0358
~ p-values! ~0.002! ~0.001! ~0.014!
Fig 1 Fig 1 Full LSE logo in colour
tions are made. The null hypothesis is rejected at the a percent level if the 14
Fig 2
x x average subsequent excess return to realized winners minus that to paper
Fig 2 LSE logo – clear space
POLITICAL SCIENCE to realized winners minus that to paper losers observed in the em-
return
OF AND
The clear space is indicated by the blue line.
Nothing must enter this area.
The clear space must continue around any
pirical distribution.
x
element (eg text, sub logos) attached to
x x the LSE square
We saw in Table III ~column 3! that investors are more likely to realize
smaller, rather than larger, gains and losses. It may be that, due to regret
LSE logo
The Disposition Effect aversion, investors are most loath to realize their greatest losses, and, due to
tax consequences, they postpone realizing their greatest gains. Lower price
• But ranges weareknow
likely that
to have the a greater
Gambler’s
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and proportion of large
Fallacy loserscause
would and a smaller
proportion of large winners than upper price ranges. Investors will therefore
information/publicity materials. It is widely used and recognised.
investors to propensity
tempted to draw a box around the full logo, but use the form shown here.
have a greater believe in spurious
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
to not
To ensure high quality reproduction, you should always use the master artwork from disk. sell losersmean-reversion
in lower price ranges, and to not
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
sell winners in higher price ranges.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
laboratory
ports PGR andexperiment
You can use the square element of the logo either as white lettering on red, PMS 485, or white
PLR for different price ranges and return ranges for January
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
through
• Each November.
Also you can use either the abbreviated or full version of the logo. Stocks goes
of 6 ‘stocks’ with aevery
price less than or
period upequal
withtoan $10, with prices
unknown
greater than $10 and less than or equal to $25, and with prices higher than
The abbreviated version is the square block with the letters LSE (fig 4).
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
16
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Overtrading
• News for the small investor gets worse in Barber and
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
Odean (2000)
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Overconfidence
• Moore and Healy argue this conflates three distinct
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
phenomena:
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
• Overestimation: overestimation of one’s objective ability or
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
chances of success
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
one’s beliefs
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Overconfidence
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
performance was:
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
(vL + vE ) vS
E[Xi |Yi ] =
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics ms + Yi
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
(vL + vE + vS ) (vL + vE + vS )
The abbreviated version is the square block with the letters LSE (fig 4).
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Overconfidence
• Moore and Healy estimate a within-subject experiment
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
hard
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
9 Self
Under-estimation and over-placement
RSPP
8
Linear (RSPP)
Estimated score for self and other
7 Linear (Self)
6
1
2
Over-estimation and under-placement
1
0 1 2 3 4 5 6 7 8 9 10
possible. The Pantone reference is PMS 485
OF E CONOMICS AND
at any size
Lecture 10: Wellbeing, Happiness, and Welfare
1
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
value
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
Two approaches:
1 Pick a new criterion (“Happiness”)
2 Ask what can be done with little information
2
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
3
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Happiness
Easterlin Paradox
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
CUB USA
3 4 5 6
40
Percent
EGY
Happiness
IND
0
4
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
Unhapp.(Empl.) - Unhapp.(Unempl.)
-.5
unhappiness
-1
• ... but by much less in
high-unemployment areas -1.5
5
Fig 2
x x
Fig 2 LSE logo – clear space
6 7 8 9 10
The clear space around the logo must be
x equal to the space between the LSE Unemployment Rate
THELONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
OF E CONOMICS AND
at any size
LSE logo
Happiness
Easterlin Paradox
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
• But does absolute income affect happiness?
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
of “paradox”
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
=⇒ use ln(income)
• Cultural norms may affect responses (“not bad”?)
=⇒ estimate (country-specific) ordinal happiness
6
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
• Generally insufficient for policy to ask people about
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
analysis when:
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
individual consumption
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).
• Reference-dependent utility and loss aversion
• Happiness and social comparisons
• People admit that their choices were not ex-ante welfare
maximising
• Addictive goods purchased by projection-biased agents are
1
often regretted
• Heuristics sometimes lead to predictable mistakes
• Revealed preferences are non-transitive
• Present bias means choosing now for tomorrow’s lunch
A ≻ B, but choosing tomorrow B ≻ A
• Short painful colonoscopy may be preferable using
experienced utility, but dispreferred using remembered
Fig 1
utility Fig 1 Full LSE logo in colour
8
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
9
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
• Libertarian Paternalism is the choice of policies which
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
prescriptions
The abbreviated version is the square block with the letters LSE (fig 4).
10
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
11
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
Welfare Criteria
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
Splurge: ⟨0, 3, 0, 0⟩
Miser: ⟨0, 0, 0, 1.1⟩
Saver: ⟨0, 1, 3, 0⟩
1
Investor: ⟨0, 2, 1, 1⟩
• Pareto improvement gives a criterion for choosing
‘investor’ over ‘splurge’: all selves’ utility weakly improved,
some strictly
• But ‘Miser’ is also pareto efficient – surely too weak a
Fig 1
criterion Fig 1 Full LSE logo in colour
• Even sillier for time-consistent individuals possible. The Pantone reference is PMS 485
12
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
13
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
consumption
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
• Let X ⊂
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
14
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
15
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
• Goal is a welfare criterion which respects all of agent’s
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
choices
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Fig 1
• Note: the null criterion (“Nothing is better than anything”)
Fig 1 Full LSE logo in colour
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
17
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
• Theorem: P ∗ has no cycles if:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
18
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
19
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
sP ∗ b ¬(bP ∗ s) ¬(nP ∗ s)
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
¬(sP ∗ n) ¬(bP ∗ n) nP ∗ b
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
jam.
• In X4 (full choice), both strawberry and nothing are
considered weakly welfare optimal.
• She may have a 1legitimate reason to sometimes like
nothing (maybe just seeing blueberry makes her
nauseated)
• Unambiguous choice says we should accept either
strawberry or nothing, and not impose strawberry
20
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
21
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
Behavioural Welfare Economics
• So let us return to our introductory example:
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
W0 U0
Never download the logo from the internet. Web versions are screen resolution and not
3 3
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
Splurge: <0,3,0,0> 2 2
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
1.1 1.1
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
Miser: <0,0,0,1.1> 8 2
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
5
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
Saver: <0,1,3,0> 4 2
The abbreviated version is the square block with the letters LSE (fig 4).
11
Investor: <0,2,1,1> 8 2
• Splurge, Saver, and Investor all optimal, all dominate Miser
• Unambiguous choice is sensible, but cautious:
• Sensible: Pareto criterion could not eliminate Miser
1
• Cautious: Preponderance (long-run) eliminated Splurge,
but self-1 would disagree
• Often several policies may be weakly welfare optimal
• Should be explicit about criterion within these optima
• Government may want to improve public health
• Firm may want to maximise cafeteria revenue
Fig 1 Fig 1 Full LSE logo in colour
22
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
THE LONDON SCHOOL lettering and the edge of the red square.
This applies to the reproduction of the logo
23
Fig 2 Fig 2 LSE logo – clear space
x x
The clear space around the logo must be
x equal to the space between the LSE
OF E CONOMICS AND
at any size
LSE logo
The LSE logo is the School’s main marketing and publicity symbol, and is designed to create a
distinct visual identity for the School. The logo should be used on all School publications and
information/publicity materials. It is widely used and recognised.
The LSE logo is a unique graphic device. It must never be reset, redrawn or altered. Do not be
tempted to draw a box around the full logo, but use the form shown here.
To ensure high quality reproduction, you should always use the master artwork from disk.
Never download the logo from the internet. Web versions are screen resolution and not
suitable for print.
It is important to keep the LSE logo clear from any other graphics. The minimum clear space
around the logo is shown above, and defines an area into which nothing should intrude.
This helps the LSE logo to stand out and prevents any detraction from its presence, by other
graphic elements used with it (full bleed pictures are the only exception).
You can use the square element of the logo either as white lettering on red, PMS 485, or white
on black. These are available electronically (EPS file) from the LSE Design Unit. An EPS file is for
PostScript printing, this is commonly used by commercial printers and the LSE Reprographics
Department. Use a TIFF file for non-PostScript printers and a GIF file for the web.
Also you can use either the abbreviated or full version of the logo.
The abbreviated version is the square block with the letters LSE (fig 4).