Question

1. Fully integrating the idea of transaction utility and acquisition utility into your experience, provide and example of...

• something you did not buy even though it would have made you better off. (4 points)
• something you did buy that you don't really want or need. (4 points)

Both of the examples must explicitly apply the concepts of transaction utility and acquisition utility for full credit.

2. Search online for an example of Ariely's findings on Zero Price or Free. (Paste a picture in your response if you can.) Then answer the following questions.

1. What can you see in this example that directly relates to what Ariely found in his research. Be specific and include any suggestions you have on how they might be more successful. (5 points)
2. Design an experiment to test whether this example is, in fact, consistent with Ariely's findings on Zero Price. (5 points)
3. Thaler described a group of arguments that traditional economists use to dispute the behavioralist. Use one of those arguments and, assuming you are a traditional economist, describe why the findings of your proposed experiments as well as those of Ariely on Zero Price can be ignored. (5 points)

If you can not answer these questions with the example that you found, look for a better example.

3. Assume you are part of the team launching a new product.

1. Describe your new product to me. (2 points)
2. With explicit references to Ariely's findings on Anchoring and Self-Herding, how will you position this new product in the marketplace? (6 points)

Answer 1

The solution with explanation are detailed as