A Bear investor is someone who is pessimistic and expects shares and asset values to fall. A Bear market is when the overall market sentiment is negative and there are more pessimists than optimists. In a bear market falling share prices are likely to become a self fulfilling prophecy. Because people expect shares to fall, …
Behavioural economics examines the psychology behind economic decision making and economic activity. Behavioural economics examines the limitation of the assumption individuals are perfectly rational. Key people: Gary Becker, Daniel Kahneman, Richard Thaler, Robert J. Shiller, Concepts in behavioural economics Bounded rationality – making decisions based on limited information and from a narrow range of heuristics …
Definition of Behavioural Theories of the Firm: An examination of the inner motives and direction of firms, using a range of models and different assumptions about those who work in a firm. In classical economics, the theory of firms is based on the assumption that they will seek profit maximisation. However, in the real world …
The benefit principle is the idea that government spending should be met by the people who receive them. In other words, everyone who receives government spending, should contribute towards it. This benefit principle was the justification for Margaret Thatcher’s Poll Tax. Everyone was charged the same poll tax rate because the argument was that everyone …
Benefits in Kind are government policies to help improve the living standards of underprivileged groups without the use of cash benefits. Examples of Benefits in Kind Free TV licenses for those aged over 80 Free Prescriptions for those on income support Free higher education. The argument is that if low income groups were given cash …
The UK has a complex system of benefits that hopes to reduce relative poverty, whilst avoiding the problems of reducing incentives to work. UK benefit spending Benefits include both means tested and universal benefits Source: OBR – Economic and Fiscal Outlook, fiscal supplementary tables, Dec. 2014 Main UK Benefits include: Pensions Incapacity benefit Unemployment benefit …
Definition of Bertrand Competition A market structure where it is assumed that there are two firms, who both assume the other firm will keep prices unchanged. Therefore, each firm has an incentive to cut prices, but this actually leads to a price war. If products are perfect substitutes this assumes the price will be driven …
The big four UK High Street banks are Barclays, Lloyds, HSBC (Formerly Midland Bank, includes Halifax) and Natwest. In recent years, the relative significance of the big four has changed with building societies such as the Halifax becoming banks. The biggest top 10 Banks in the UK Note: The second biggest banks is now the …