Advanced Consumer Theory: Advanced Study Guide
This guide focuses on the core extensions of advanced consumer theory, breaking through the determinacy and static analysis framework of basic theories, extending to complex scenarios such as display preferences, uncertainty decision-making, and inter-temporal choices, while integrating frontier perspectives of behavioral economics to help learners build a more realistic consumer behavior analysis framework.
Empirical Derivation of Preferences: Display Preference Theory
Display Preference Theory (Weak Axiom, Strong Axiom)
- Core Logic of Display Preferences: Deriving Preferences from Consumer Behavior Rather Than Subjective Assumptions
- Weak Axiom of Revealed Preference (WARP): Definition, Content, and Case Analysis of Axiom Violations
- Strong Axiom of Revealed Preference (SARP): Extension of the Weak Axiom, Transitivity Requirement, and Application Areas
- Testing Method for Display Preference Axiom: Preference Consistency Assessment Based on Consumer Data
- Display Preference Theory and the Relationship and Differences of Traditional Utility Theory
Consumer Decision-Making Under Uncertainty
Consumer Choice Under Uncertainty
- Basic Elements of Uncertainty Decision: Probability, Outcome, and Expected Gain
- Method for Describing Uncertainty Scenarios: Construction and Application of a Lottery Model
- Consumer Decision-Making: Transition from Deterministic Utility to Expected Utility Extension
- Expected Utility Maximization as the Core Criterion Under Uncertainty
Expected Utility Theory and Risk Attitudes (Risk Aversion, Risk Neutrality, Risk Preference)
- Expected Utility Theory's Axiomatic System: Completeness, Transitivity, Independence, and Continuity
- Classification criteria for risk attitude: concavity of utility functions and risk coefficient
- Risk-Averse Individuals: Features of the Utility Function and Decision-Making Behavior Tendencies
- Risk-Neutral Agents: Properties of Utility Functions and Decision-Making Tendencies
- Risk-Takers: Features of the Utility Function and Decision-Making Tendencies
- Measurement of Risk Attitudes: Certainty Equivalent and Risk Premium
Economic Analysis of the Insurance Market
- Inherent Logic of Risk Aversion and Insurance Demand: The Consumer's Risk Transfer Motive
- The core mechanisms of the insurance market: Premium pricing and the risk pooling principle
- Definition of Equitable Insurance and Non-Equitable Insurance: An Analysis from the Perspective of Expected Gain
- Optimal Insurance Choice for Risk-Averse Individuals: Decision Conditions for Full and Partial Insurance
- Information Asymmetry in the Insurance Market: Adverse Selection and Moral Hazard and Their Impact on the Market
Inter-temporal Decision-Making and Dynamic Consumption Model
Inter-temporal Choice and Time Preference
- Core Scenario of Inter-temporal Choice: The Trade-off Between Immediate Consumption and Future Consumption
- Expression of Time Preference: Discount Factor and Time Preference Rate
- Construction of the Inter-temporal Budget Constraint: Income, Interest Rates, and Consumption
- Inter-temporal Utility Function Setting: Exponential Discount Model and Hyperbolic Discount Model
- Impact of Interest Rate Changes on Inter-Temporal Consumption Decisions: Substitution and Income Effects
Dynamic Optimization Model of Consumer Behavior
- Dynamic Optimization: Core Goal of Utility Maximization from Multi-Period Consumption
- Basic framework and solution methods for the two-period consumption model
- Permanent Income Hypothesis and Life Cycle Hypothesis: The Classical Theory of Inter-temporal Consumption
- Dynamic Consumption Model Under Uncertainty: Analysis of the Motive for Precautionary Savings
- Dynamic Optimization Models: Derivation of Euler's Equation and Its Economic Implications
Empirical Examination of Preferences and Extensions in Behavioral Economics
Empirical Methods for Testing Consumer Preferences
- Core Data Sources for Preference Testing: Household Consumption Survey and Experimental Data
- Measurement Testing Steps: Data Cleaning and Statistical Validation
- Estimation Methods for Utility Function Parameters: Maximum Likelihood Estimation and Generalized Method of Moments Estimation
- Test of Heterogeneity in Preferences: A Comparison Analysis of Consumption Behaviors Across Different Groups
- Common Challenges in Empirical Testing: Approaches to Addressing Missing Data and Endogeneity
Behavioral Economics: Consumer Behavior from the Perspective of Bounded Rationality, Mental Accounts, and Other Concepts
- The Principle of Limited Rationality: A Correction to the Traditional Assumption of Rationality and Its Real-World Implications
- Psychological Account Theory: Account Division and Non-Substitutability in Consumer Decision-Making
- Loss Aversion and the Endowment Effect: Deviation from Utility Maximization
- Anchoring Effect and Framing Effect: The Influence of External Factors on Consumer Choices
- Behavioral economics extends and challenges traditional consumer theory.