Q2. What is the key to the identification and measurement of how the authors feel about changes?
While the identification and measurement of how the authors feel about changes is anactive area of research, one core aspect of their reference-based preferences is known to be crucial: Loss aversion.
Q3. Why is it important to study the market implications of certain psychological phenomena?
Because markets are such a major institution, and may magnify or mitigate the effects of certain psychological phenomena, it is important to investigate the market implications of these phenomena.
Q4. What are the realms where the effects of psychological phenomena are greatly diminished?
There are realms, such as low-transactions-costs asset markets, where marketsmight greatly diminish the implications of some psychological phenomena.
Q5. What is the unique functional form that generates timeconsistent preferences?
It is the unique functional form that generates timeconsistent preferences, whereby the preference between any two intertemporal tradeoffs in momentary well-being—between, say, getting lesser satisfaction earlier versus a greater amount of satisfaction later—is the same no matter when asked.
Q6. What is the trend towards integrating new psychological assumptions into economic analysis?
As economists are starting to realize that metaarguments for dismissing these modifications are not helpful to economics, and to realize that adding greater psychological realism will improve it rather than undermine economics, such defensive arguments are decreasing.
Q7. What is the intended moral of my tale?
The intended moral of my tale is, of course, precisely that many of the arguments used against unfamiliar assumptions are awful economics and don’t hold up to scrutiny.