References:

1. Dan Ariely experiment - Social Security Number as an anchor for the value of a bottle of wine

Insights:

1. Anchoring undermines the belief that market prices are based on supply and demand

Examples:

1. Small farm or factory - with each new labour input there will come a time where each added worker causes less output than the last.

Definition:

1. Missed opportunities, as a result of decision making.

Insights:

1. More rational decisions are made when we are more informed about exactly what we are giving up.
2. Time is money.

References:

1. 'The cost of something is what you give up to get it.' - Greg Mankiw, Harvard economics professor
2. Famous economics principle: 'There's no such thing as a free lunch'.

Definition:

1. Occurs when people abuse a resource because they do not own it.

References:

1. Adam Smith - recognised that there were circumstances when the invisible hand would not work, including the Tragedy of the Commons.

Insights:

1. Poor or insufficient property rights can damage an economy - ownership encourages people to invest in and safeguard the value of their property.
2. Where there is a limited resource, those exploiting it will do so to the detriment of their neighbours.