Two behavioural finance problem sets related to Temporal Discounting Assignment

Two behavioural finance problem sets related to Temporal Discounting and Bayesian Learning vs Reinforcement Learning in Financial Decision making - Assignment Example The exponential discounting graph has a positive slope due to its positivity index. This person should sign an agreement in period zero due to income effect and substitution effect. The high interest rate increases income a certain amount of time. Therefore, increase in consumption during the first and second period makes the income effect of the borrower to be negative in the period. Additionally, due to substitution effect, the gross interest rate is relative to consumption price during period zero compared to period 1 and 2 (Nielsen, 2005). Hence, it will be more expensive in the first and second period compared to period zero. As such, for a person, a rise in interest rate in the first or second period may rise or reduce the rate during period zero. Assuming that Mr. Spout has an expected payout of $1 when he invests in stock A, Mr. Spout will not choose the guaranteed stock A. Stock has an expected uncertainty of 1/3; therefore, Mr. Spout will take his chances and invest in stock B. He will not have preference between investing in either stock A or investing in stock B (Forbes, 2009). To state this in a different way, Mr. Spout will later select the investment that has a higher expected return. Mr. Spout, will invest in stock B in future, since he does not consider taking into account the investment risk in his decision. As a Bayesian learner, Mr. Spout decision will be influenced by uncertainty knowledge and the time is linked through the process of learning of the stocks. As a risk neutral investor, Mr. Spout will be indifferent between investing in stock A or in Stock B. Since he has an experience in stock A, Mr. Spout will invest in stock B. As a Bayesian investor, Mr. Spout experimented in the first period and observed the results. Therefore, he will invest in stock B due to its uncertainty element attached to the stock. He will not have preference between

Customer Service Operations in the telecomunication in the UK Essay

Customer Service Operations in the telecomunication in the UK - Essay Example With the increase in the market for phones, several companies both retailing handsets and providing mobile phone services have cropped up, each struggling to gain a significant segment of the market. This mostly leads to mobile wars, especially among the service providers, as each of the companies fight to provide the latest, affordable and most valued services to their customers. There is also stiff competition among handset providers, who spend millions of dollars on research and development to provide latest features to their handsets to attract different segments of the market. Hence, it is not hard to find features such as mobile TV, GPRS, e-mail and internet features on most mobile phones. UK Mobile phone industry The mobile phone industry, like most corporate industries have brought both advantages and disadvantages to the modern society. Advantages brought by the advent of mobile phones includes easy communication which has led to expansion of businesses, the creation of diff erent kinds of jobs, sharing of knowledge among people of different regions of the world, it has helped in expansion of the academic world by making research and sharing of such knowledge easy and making it easier for business transactions to be carried out among other benefits. Disadvantages of mobile phones include increase in thefts connected with handsets and identities, mobile phones distract workers and students from carrying out their duties on time, especially due to social network services on internet-enabled phones, they cause distractions leading to accidents especially on the road and mobile phones have led to deterioration of personal communication which has been reduced to short message services, calls and e-mails among other disadvantages. It is however up to individual mobile phone users to determine whether mobile phones add value to their lives or they could do better without them. Being one of the biggest and fastest-growing industries in the world, the UK not exc luded, the mobile phone industry has had to be regulated and the fierce competition among stakeholders have given rise to codes of conduct which all the players have to adhere with. Service provision is an area in this industry that the companies in the industry overlook at their own detriment. Most consumers of the mobile phone industry usually look for specific services from their providers (Ericsson 2009). These may include low call and data rates, wide coverage and polite and helpful customer care representatives. Many companies have gone miles ahead and have come up with more creative ways to attract and retain customers. Methods used in increasing client bases for companies include offering corporate packages for companies, advertising, promotions and handset and service providers coming together to offer unique products to consumers. Service delivery however remains the biggest determinant of market share for companies operating in the mobile phone industry. Service Products Developing Service Products is one of the areas explored by players in the mobile phone industry to gain significant market share. This area involves coming up with new and useful products to attract consumers in the market (Blueflag 2010). For instance, at the beginning of the mobile phone era, most phones had very few features that basically included calling and texting features, digital and alarm clocks, calculators and calendars. However with time, mobile phones have