Chapter 4 Baked beans are an inferior good for me because a month ago I bought a couple of cans, but ever since I started working, I haven't purchased them. Instead of beans, I have been buying Campbell's Chunky Soup and ever since my income increase, my consumption of soup has gone up. I am willing to pay more than the market price for a round of golf on a public course. Beanie Babies illustrate the bandwagon effect. They started out fairly small, but when they started to catch on, people were willing to pay outrageous sums of money to purchase them illustrating that demand had drastically increased above and beyond the normal market demand.
Artwork is a good example of the snob effect.
My uncle has a lot of paintings, but as soon as a certain painting's quantity on the market goes up seen in an increased number of prints, he no longer values it as highly. Chapter 5 I am risk averse because when I go to the casino, I always value the certain income I have with me more than the expected income from gambling. A friend of mine is risk neutral because he has a job offer this winter where he works on commission and one where he is on a set hourly wage. My friend had to think about it and the incentive of extra income that is offered to risk loving people is the opposite of a risk premium associated with risk aversion. My friend is risk loving.