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It is Friday and Maria is planning when to do her homework. She has to do her homework on one of the following days: Friday, Saturday, Sunday, or Monday. These four options provide different utility streams as follows. Do homework on Friday Do homework on Saturday Do homework on Sunday Do homework on Monday Friday Saturday Sunday Monday -5 5 10 4 -5 5 5 0 0 0 10 -5 10 10 10 -5 1. Suppose Maria is an exponential discounter with 6 = 0.9. On Friday, when does she plan to do her homework? When does she actually do her homework? 2. Suppose Maria is an exponential discounter with d= 0.7. On Friday, when does she plan to do her homework? When does she actually do her homework? 3. Suppose Maria is a naive hyperbolic discounter with 6 = 0.9 and 3 = 0.9. On Friday, when does she plan to do her homework? When does she actually do her homework? 4. Suppose Maria is a naive hyperbolic discounter with 6 = 0.9 and 3=0.8. On Friday, when does she plan to do her homework? When does she actually do her homework? 5. Suppose Maria is a sophisticated hyperbolic discounter with 6 = 0.9 and 3 = 0.8. On Friday, when does she plan to do her homework? When does she actually do her homework? 6. Continue to assume that Maria is a sophisticated hyperbolic discounter with 80.9 and B=0.8. Suppose now that on any of the four days, Maria can pay an instantaneous cost of 1 and use a commitment device that forces her to do the homework on a particular day. For example, if on Saturday she uses the commitment device to force herself to do the homework on Sunday, it would incur a cost of 1 on Saturday. Can Maria be made. better off by using the commitment device? Why? It is Friday and Maria is planning when to do her homework. She has to do her homework on one of the following days: Friday, Saturday, Sunday, or Monday. These four options provide different utility streams as follows. Do homework on Friday Do homework on Saturday Do homework on Sunday Do homework on Monday Friday Saturday Sunday Monday -5 5 10 4 -5 5 5 0 0 0 10 -5 10 10 10 -5 1. Suppose Maria is an exponential discounter with 6 = 0.9. On Friday, when does she plan to do her homework? When does she actually do her homework? 2. Suppose Maria is an exponential discounter with d= 0.7. On Friday, when does she plan to do her homework? When does she actually do her homework? 3. Suppose Maria is a naive hyperbolic discounter with 6 = 0.9 and 3 = 0.9. On Friday, when does she plan to do her homework? When does she actually do her homework? 4. Suppose Maria is a naive hyperbolic discounter with 6 = 0.9 and 3=0.8. On Friday, when does she plan to do her homework? When does she actually do her homework? 5. Suppose Maria is a sophisticated hyperbolic discounter with 6 = 0.9 and 3 = 0.8. On Friday, when does she plan to do her homework? When does she actually do her homework? 6. Continue to assume that Maria is a sophisticated hyperbolic discounter with 80.9 and B=0.8. Suppose now that on any of the four days, Maria can pay an instantaneous cost of 1 and use a commitment device that forces her to do the homework on a particular day. For example, if on Saturday she uses the commitment device to force herself to do the homework on Sunday, it would incur a cost of 1 on Saturday. Can Maria be made. better off by using the commitment device? Why?
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Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
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