In each of the following examples, explain whether the decision is rational or irrational.
Describe the type of behavior exhibited.
a. Kookie's best friend likes to give her gift cards that Kookie can use at her favorite stores. Kookie, however, often forgets to use the cards before their expiration date or loses them. Kookie, though, is careful with her own cash.
b. In May 2010, the Panera Bread company opened a store in Clayton, Missouri, that allows customers to pay any amount they like for their orders; instead of prices, the store lists suggested donations based on the cost of the goods. All profits go to a charitable foundation set up by Panera. As of May 2011, the store was pleased with the success of the program.
c. Rick has just gotten his teaching degree and has two job offers. One job, replacing a teacher who has gone on leave, will last only two years. It is at a prestigious high school, and he will be paid $35,000 per year. He thinks he will probably be able to find another good job in the area after the two years are up but isn't sure. The other job, also at a high school, pays $25,000 per year and is virtually guaranteed for five years; after those five years, he will be evaluated for a permanent teaching position at the school. About 75% of the teachers who start at the school are hired for permanent positions. Rick takes the five-year position at $25,000 per year.
d. Kimora has planned a trip to Florida during spring break in March. She has several school projects due after her return. Rather than do them in February, she figures she can take her books with her to Florida and complete her projects there.
e. Sahir overpaid when buying a used car that has turned out to be a lemon. He could sell it for parts, but instead he lets it sit in his garage and deteriorate.
f. Barry considers himself an excellent investor in stocks. He selects new stocks by finding ones with characteristics similar to those of his previous winning stocks. He chocks up losing trades to ups and downs in the macro economy.