Miracle Hangover Cure Summary

1. The first chapter in the book is about the market and its inner workings. The book briefly explains the idea of supply and demand, in which the price of a certain good or service will reach the point where all the demand is equivalent to the supply. However, the value of something is not determined by its necessity, but its desire within society, as seen by the difference in cost between a diamond and life giving water. Markets operate as they do because people try to maximize the amount of utility for themselves. Nevertheless, a strict rationalism model cannot be used for predicting all the occurrences of a market because of the ever changing behavior of people; thus economists must take precautions against

In today 's society, we face many obstacles in our attempt to achieve the feeling of happiness. As intelligent beings, we try to solve these problems by taking the path that best benefits us. The theory of utilitarianism provides a solution to this but at what cost? What are the benefits and disadvantages of utilitarianism? Is utilitarianism an idea one should live by? What is utilitarianism? I plan on answering these questions within this paper and understand how they relate to everyday life. I will also look at arguments for and against utilitarianism. Then analyze the appealing and unappealing features to determine if utilitarianism should be followed as an absolute rule.

Kahneman’s article is an analysis of intuitive thinking and how it guides our decision-making. Although primarily aimed at the field of psychology, it is an interdisciplinary article with applications in economic theorising. Kahneman attempts to differentiate between two systems of thought, one of intuition (system 1) and one of reasoning (system 2), and argues that many judgements and choices are made intuitively, rather than with reason (a slower and more deliberate process). Intuitive decision making, which encompasses heuristics, although generally more efficient and rapid, makes the agent potentially subject to errors due to framing effects or violations of dominance. The analysis of the studies and theoretical situations also provides criticism of the commonly held model of the rational agent within economics. The article also further conceptualises Kahneman’s theory, the Prospect Theory (Kahneman & Tversky, 1979), which has descriptive applications of people’s choice in decision-making situations involving risk and known probability of outcomes. These situations are typically unexplained by the more normative rational agent model.

First, we assume that all of these entities have unlimited wants. This assumption forms the basis of economics. It is the study of how entities try to fulfill these unlimited wants when confronted with limited resources. Second, we assume that all of these entities are rational actors. We assume that they typically act in ways that will help to achieve their goals. This allows us to understand their actions which we would not be able to do if we assumed that they constantly acted on the basis of whims.

Chapter 1, the Lesson: One of the greatest fallacies associated with economics is that there is an abundance of economists selfish interests involved. Because are selfish nature men tend to see only the immediate effects of decisions. This is especially true when it comes to economics. Every group has it’s own interests and because of this certain policies that may benefit one group, may not benefit another group. Because of self-interest, groups will banter back and fourth persistently until a solution is reached. This is one of the first causes of

Carla had received very low annual return from her investment portfolio comprising of stocks of five companies for two years. Her decision to continue holding the same portfolio of assets will be an example of:

The three principles of utilitarianism are “1. All ‘pleasures’ or benefits are not equal, 2. The system presumes that one can predict the consequences of one’s actions, and 3. There is little concern for individual rights” (Pollock,

2. The key economic concept that serves as the basis for the study of economics is:

The first principle in individual decision-making is facing a trade-off. In order for individuals to accomplish their goals or to obtain something they desire, there is usually something that must be given up or traded to accomplish that. In Chapter 1 Principles of Economics, efficiency vs. equity is discussed which helps further explain this principle. Society is always desiring to

Act Utilitarianism determines a morally right act as the one that produces “the greatest overall utility in its consequences.” (EC, p. 111) In Case 1 (EC, p. 124), it could be argued that Act Utilitarianism would support an individual purchasing a hybrid car due to the overall utility of the consequence outweighing the disutility. However, Act Utilitarianism has weaknesses to accompany its strengths when assessing whether an act is morally right or wrong. One problem of Act Utilitarianism, shown in Case 1 (EC, p. 124), is that it is irrational to expect people to calculate all of the possible consequences and the scope, intensity, duration, or possibilities of buying or not buying a hybrid car. The buyer is expected to scope out and recognize every individual that is affected by his/her act of buying a car. They are also expected to assess the period of time of which the effect of their act lasts and how strong or weak the force of that act is. It’s unrealistic to assume that a buyer will place everyone else’s preferences before his/her or predict the consequences of such action in order to create an overall happiness. The theory does present a solution to strengthen this weakness, which is the ‘rules of thumb.’ Buyers will most likely not purchase a hybrid car while following the ‘rules of thumb’ law due to the immediate pleasure of purchasing a cheaper and more recognizable car. However, its obvious that this solution does not always produce what Act Utilitarianism would

Economists have often modelled human decision makers as completely rational. According to this model, rational people know their own preferences, gather and accurately process all relevant information, and then make rational choices that advance their own interests. However, Herbert Simon won a Nobel Prize in economics by pointing out that people are rational, but only boundedly so in that they seldom gather all available information, they often do not accurately process the information

The topic I have chosen to write this research paper over is the rational choice theory. The rational choice theory started with the work of Cesare Beccaria in the late eighteenth century. From that point forward, the theory has been developed and opened up to incorporate different viewpoints, like discouragement and routine activity theory. The rational choice theory is a monetary rule that expresses that people dependably settle on reasonable and legitimate choices. These choices furnish individuals with the best advantage or fulfillment, given the decisions accessible and are likewise in their most elevated self-interest.

Economic way of looking at life helps individuals to know moral pathways and how to be ethical in economics. In chapter 7, social issues that are discussed, as labor supply in which you find household production, the family, and the life cycle can be well analyzed using economic way of looking at life. In making household decisions, certain factors have to be in mind, such as the economy, time, income and individuals involved.

Economist figure that everyone acts rationally because of incentives and self-interest. We assume that individuals do not intentionally make decisions that would leave themselves worse off. Rationality assumption is the assumption that people do not intentionally make decisions that would leave them worse off. The distinction here is between what people may think—the realm of psychology and psychiatry and perhaps sociology—and what they do. (Miller, 2015).

that an economy can be below full capacity in the long-run. This theory, on the other hand,