Suppose thatβ= 0.5, and Ann can commit to finish the project next week (e.g.by imposing a heavy cost on herself if the project is not finished nextweek).Then she will (A) do the project this week;(B) commit to do it next week and finish it then;(C) do it next week without commitment;(D) commit and then not finish it.
Suppose thatβ= 0.5, and Ann can commit to finish the project next week (e.g.by imposing a heavy cost on herself if the project is not finished nextweek).Then she will (A) do the project this week;(B) commit to do it next week and finish it then;(C) do it next week without commitment;(D) commit and then not finish it.
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.12P
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Ann can finish a project either this week or next week. The delayed rewardsare 10 in either case. (The project can be done only once or not at all).Next week is busy and the cost of finishing the project are lower thisweek. Theimmediate costs are 4 this week and 6 next week.Ann has a quasi-hyperbolic utility withδ= 1 andβ <1. Imagine that Anndoes not finish the project this week. Then she should finish it next week
(A) ifβ >0.6; (B) ifβ >0.4; (C) only ifβ= 1; (D) for anyβ.11.
Suppose thatβ= 0.5 and Ann correctly anticipates her choice next week. Thenshe should finish the project
(A) this week; (B) next week; (C) never; (D) not enough information.
Suppose thatβ= 0.5, and Ann can commit to finish the project next week (e.g.by imposing a heavy cost on herself if the project is not finished nextweek).Then she will
(A) do the project this week;(B) commit to do it next week and finish it then;(C) do it next week without commitment;(D) commit and then not finish it.
Can you help me answer the bolded question? Thank you
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