The director of the school cafeteria discovers that students like chocolate chip cookies much better than molasses cookies.To sell the molasses cookies,she prices them at 25 cents each and continues to charge 1 dollar for the chocolate chip cookies.When students keep buying far more chocolate chip cookies,they are violating _____ theory,which is a _____ model of human decision making.
A) prospect; normative
B) expected utility; normative
C) prospect; descriptive
D) expected utility; descriptive

Question

Quizplus · Accepted Answer

Expected utility theory is a normative model that assumes individuals make rational decisions to maximize their utility, but the students' preference for chocolate chip cookies despite the price difference suggests they are not behaving according to this model.

The Director of the School Cafeteria Discovers That Students Like