12/09/2009
Lecture 26: Final Exam Review

24 short-essay questions, best 20 are graded, worth 5 points per question.

Some will be (t/f/uncertain) + justification.  Others will be broader short-essay
  question, e.g., "Explain how a ROSCO works."

Expect ~5 minutes of writing per question.

Present bias: people who want more in the future than you would offer them now,
  otherwise they will just take it now
  - experiment (ashraf, carlin, yin), we covered compared getting money now 
    vs. 1 month, and 6 months vs. 7 months.
  - if someone wasn't hyperbolic discounter/wasn't present-biased, they would
    want 200 or 300 for now vs. 1 month or 6 months or 7 months.  If they
    were present-biased, then they would care more about now vs. 1 month,
    and wouldn't care for 6 vs. 7.

Difference between naive and sophisticated hyperbolic discounter
  - good answer would do two things: define hyperbolic discounter, and then
    differentiate naive and sophisticated.
  - hyperbolic discounter: someone's choice between getting money at t or t+1
    differs when t = now or t = down the line.
  - sophisticated hyperbolic discounter is aware that they are an HD, and
    finds product to commit themselves to the fact that their preferences will
    change in the future, whereas the naive HD will not seek to commit themselves.

# Example questions
Cohen and Dupas (2009) found that there is very little demand for insecticide-treated
bednets in western kenya.  Explain whether this is true, false, or uncertain.
 -> False.  They found how cost-sharing affected demand and use of bednets.  Specifically,
    the demand fell to almost 0 when the people had to pay even a small amount,
    and so they found that free bednets were most effective.

Credit market frictions create a 'poverty trap' and exacerbate income inequalities.
Explain whether this is true, false, or uncertain.
 -> False.  frictions are one part in a three-ingredient 'poverty trap', which
    include credit constraints, fixed cost for production, and a desire to borrow.

Import substitution policies promote growth by reducing import tariffs and
thereby encouraging imports to substitute for domestic activity.  Explain 
whether this is true, false, or uncertain.
 -> False.  The idea is to protect domestic firms by increasing tariffs on
    imports so that consumers increase demand for domestic firms.
 -> Extra bell and whistle: give an example where ISIs to increase growth.
    But that's not requested exactly, so it's unclear whether we would need to
    give that answer to get a 5.