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there appears to be a connection
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I can experimentExperimentation required
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What about the linear case?
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What about S-curves?
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Think about the decision to buy or not to buy a certain product.
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If the utility x obtained by buying a product is known, you don’t have to worry about it, but in reality, it is unknown.
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Let’s express uncertainty and say N(x, e)
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In this case, too, if the relationship between the amount of profit loss and utility is linear, then buying at x is correct.
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But as prospect theory points out, there is a large coefficient on the loss side E(x) = x if x > 0 else k * x
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In a situation where the price of the same product is decreasing or the utility x of the product is increasing with the same price, the larger the k, the more delayed the timing of the purchaseExperiment needed - innovator theory is reproduced.
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‘others are buying’ raises the estimate of x principle of social proof.
- Is this a factor that causes bubbles to occurExperiment required
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Utility of “buying what others have not yet bought
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The negative utility of losing x amount of money depends on the amount of money you have.
- I hesitated to buy a $3,000 technical book when I was in high school, but I am less hesitant now that I am working and have a comfortable income.
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