Question 3 (30 marks) For each of the phenomenon below: (i) briefly explain how the behavior violates the prediction from the rational choice framework and (ii) identify the most appropriate behavioral heuristic and briefly explain how the behavior is consistent with the heuristic you have identified. Note: In part (i) you need to just explain the violation of RCF (if any) without providing any rationale for the violation. In part (ii) you need to identify with an explanation the heuristic (a specific heuristic and not just the class of heuristics) that according to you provides the most appropriate rationale. In case you determine that the scenario is CONSISTENT with RCF based prediction then provide an explanation in support and ignore part (ii). (5 x 6 marks = 30 marks) (a) You are planning a long hiking expedition during summer in one of two locations, say X and Y. After researching the attractiveness of the landscape, as well as the safety of the two places, you select location X for your expedition. However, right before you make your travel plans for X, you read a news item about a hiker getting injured in location X. Consequently you change your plan and decide to go to location Y instead. (i) Violation (if any) from the prediction of rational choice (brief explanation) (ii) Heuristic consistent with the scenario (identification and brief explanation) (b) Consider a fair six-faced dice, i.e. one which has equal probability of coming up 1,2,3,4,5 or 6. When asked which is the more likely outcome in 6 rolls of this dice, most people choose the outcome 524631 compared to the outcomes, 333111 or 555555 or 224466. (i) Violation (if any) from the prediction of rational choice (brief explanation) (ii) Heuristic consistent with the scenario (identification and brief explanation) (c) People are more likely to travel to an outlet store halfway across town when they are interested in buying a product available at a more conveniently located store for $200 which the outlet store is selling for $100, compared to when they are interested in buying a product available at the same conveniently located store for $10000 and at the outlet store for $9900. (i) Violation (if any) from the prediction of rational choice (brief explanation) (ii) Heuristic consistent with the scenario (identification and brief explanation) (d) People who feel unwell are more likely to attend a sports event if they bought non- transferable tickets in advance compared to transferable ones. (i) Violation (if any) from the prediction of rational choice (brief explanation) (ii) Heuristic consistent with the scenario (identification and brief explanation)