How we behave

(a) [not counted toward the grading purpose] Name the Bias:

Mr. X is always late for meetings. When asked by his boss why, he said, I always think

it will not take more than half an hour for me to get ready. But clearly, it does.

(b) (5 points) A survey has been conducted on discounts and price flexibility with the

following 2 scenarios.Scenario A. A queue has developed for a meeting with a popular financial adviser, and

customers must now wait two months to get a slot. The adviser had been charging consulting

fees at a list price of $200 per hour. Now the adviser decides to price the service at $100

above list price.

What do you think about this decision by the adviser?

Results: ( N =130) Acceptable 29% Unfair 71%

Scenario B. A queue has developed for a meeting with a popular financial adviser, and

customers must now wait two months to get a slot. The adviser had been charging consulting

fees at $200 per hour, which reflects a discount of $100 below list price. Now the adviser

decides to remove the discount.

What do you think about this decision by the adviser?

Results: ( N =123) Acceptable 58% Unfair 42%

So, many more people think the latter decision is acceptable. Is this behavior consistent

with the average survey respondent being rational?