经典迈克尔贝叶著管理经济学与商务战略课件英文版Chap012.ppt

Managerial Economics Business Strategy Chapter 12 The Economics of Information Overview I. The Mean and the Variance II. Uncertainty and Consumer Behavior III. Uncertainty and the Firm IV. Uncertainty and the Market V. Auctions The Mean The expected value or average of a random variable. Computed as the sum of the probabilities that different outcomes will occur multiplied by the resulting payoffs: E[x] = q1 x1 + q2 x2 +…+qn xn, where xi is payoff i, qi is the probability that payoff i occurs, and q1 + q2 +…+qn = 1. The mean provides information about the average value of a random variable but yields no information about the degree of risk associated with the random variable. The Variance Standard Deviation Variance A measure of risk. The sum of the probabilities that different outcomes will occur multiplied by the squared deviations from the mean of the random variable: s2 = q1 (x1- E[x])2 + q2 (x2- E[x])2 +…+qn(xn- E[x])2 Standard Deviation The square root of the variance. Uncertainty and Consumer Behavior Risk Aversion Risk Averse: An individual who prefers a sure amount of $M to a risky prospect with an expected value, E[x], of $M. Risk Loving: An individual who prefers a risky prospect with an expected value, E[x], of $M to a sure amount of $M. Risk Neutral: An individual who is indifferent between a risky prospect where E[x] = $M and a sure amount of $M. Examples of How Risk Aversion Influences Decisions Product quality Informative advertising Free samples Guarantees Chain stores Insurance Price Uncertainty and Consumer Search Suppose consumers face numerous stores selling identical products, but charge different prices. The consumer wants to purchase the product at the lowest possible price, but also incurs a cost, c, to acquire price information. There is free recall and with replacement. Free recall means a consumer can return to any previously visited store. The consumer’s reservation price, the at which the consumer is indifferent betwee