Oxbridge Economics interview preparation

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Reply 40

littlemiss-sunshine

trollman

exeter college oxford ppe

I applied there last year (for E&M)... good choice, it's lovely :biggrin:

(even if I didn't get in :p:

)

Reply 41

danny111

lol who neg repped me? what i do wrong???

fitz, cambridge

NesQuiK.

Hi Greg,
To start us off: Is impulse buying irrational?

are you sure that this would be likely to come up? Perfect rationality is assumed in virtually all modern economic models.

Reply 44

mikey u 500

PGtips92

Hmmm I think the other guy is right.

If we were talking about CB analysis from government's / an obeserver's perspective, then yeh it would include externalities.

But, the question is am I acting rationally: a rational individual (self interested actor, etc) should only care about the private costs / benefits of their actions because the externalities don't affect them. e.g. it's rational for each fisherman to fish as much as possible even if this means that there won't be any fish left in 5 years... the decision to overfish was still a rational decision despite the long term social costs ("if I don't overfish, someone else will therefore I overfish")

Maybe a Uni economist could help us out here...?

of course a rational self interested actor is only interested in himself. :s-smilie:

Reply 45

mikey u 500

Jinru

Nah I think ill study it anyway, on a gap year atm

read begg fischer & dornbusch or a first year textbook. Don't bother with AS (or A2 for that matter), its far too simplistic and does not really have much at all in common with degree level.

Reply 46

dawgnut

500 mikey u

read begg fischer & dornbusch or a first year textbook. Don't bother with AS (or A2 for that matter), its far too simplistic and does not really have much at all in common with degree level.

thank you for the suggestion

Reply 47

Laconic

500 mikey u

are you sure that this would be likely to come up? Perfect rationality is assumed in virtually all modern economic models.

Not only could this come up, but very similar questions have come up in Economics interviews in the past (well, I've not heard anything about it from Oxford classmates, but somebody I know at Cambridge got asked a pretty similar question at their interview). A few good answers have been proposed in this topic already.

Reply 48

mikey u 500

Laconic

fair enough

Reply 49

NesQuiK.

500 mikey u

are you sure that this would be likely to come up? Perfect rationality is assumed in virtually all modern economic models.

I am not sure of anything about the Cambridge admissions process, although perfect rationality being assumed in virtually all modern economic models is one of the major criticisms with the discipline at the moment, and so I would see no reason for it not to be a topic for discussion

Reply 50

mikey u 500

NesQuiK.

previous poster has already answered. I suppose it is important to understand assumptions and why they are made

Reply 51

JRBDK

Roundabout

Nice analysis.

I think one could also mention that the people who tend to impulse buy products often derive pleasure (=utility) from the actual transaction itself, as opposed to deriving it from just using the product.

I think Finland is on to something. And I think that this pleasure derived from the transaction is not a lasting pleasure and it might not even be strictly connected to the product which is purchased; a person who has a history of impulse buying is probably an easier target for fancy pricetags and advertisements in e. g. supermarkets because the pricetags and advertisements sub-consiously represent the pleasure-utility waiting to be paid out when the person purchases the product bearing the pricetag. For such a person, I don't think that the purchase is necessarily rational because it might only be defendable as long as the effect of the purchasing-pleasure is still present. When it disappears the product may not be of a benefit which out-weighs the costs that the person faced when buying the product at the supermarket. Therefore, the purchase may not be completely rational.

Reply 52

danny111

NesQuiK.

i disagree with this criticism. human beings are more rational than one gives them credit.

the only criticism that holds from this is more linked to the fact that humans arent machines. e.g. thats why game theory is exactly that - von neumann and nash could solve their own problems in their head. no one else can and hence what is assumed in the theoretic models does not hold 100% in real life.

but this doesn mean people are not "rational".

Reply 53

BigFudamental

danny111

Yea I agree with this. The breakdown of canonical economic models that assume people solve optimisation problems in their head doesn't necessarily imply that people aren't behaving "rationally", it just means the models are crap. Rationality has become a pretty confusing term these days.

Reply 54

trollman

littlemiss-sunshine

I applied there last year (for E&M)... good choice, it's lovely :biggrin:

(even if I didn't get in :p:

)

its so amazing, best college perhaps excluding balliol :smile:

Reply 55

PGtips92

500 mikey u

of course a rational self interested actor is only interested in himself. :s-smilie:

Exactly. That's what I said.

Originally Posted by TeDaX
Again, "the cost-benefit approach differs from private sector methods of appraisal (...) It seeks to include all of the costs and benefits, not just private ones."

Colin Bamford et al. Economics for AS and A Level, 2002, Cambridge University Press

I was responding to this comment. Individuals making rational decisions consider only the private costs and benefits and not the externalitites as TeDaX thought.

Oh and this is a place for discussion so take your sarcy :s-smilie:

elsewhere.

Reply 56

I_Am_Abbas

"are economic recessions inevitable"

lol

Reply 57

I_Am_Abbas

Earsnot

a wise man once told me.... :p:

he wasn't that wise (and there was a logical fallacy in my first paragraph i spotted the other day!)

who are you?

Reply 58

n_251

I_Am_Abbas

"are economic recessions inevitable"

lol

I am quite intrigued to see people's responses on this...because, truth be told, I'm not sure how I'd go about tackling this using knowledge from AS Economics.

Reply 59

andrew.P

Economics at Sidney Sussex...

I argued in my personal statement that reform of central banks was needed to reduce the chance of recession in future, and will probably be ripped apart in interview for that!