Question 1

suggest(s) all alternatives can be rank-ordered from worst to best and that alternatives with highest expected values should be preferred.

Accepted Answer

A) Framing effects 
B) The law of large numbers 
C) The endowment effect 
D) Expected utility theory 
E) Bounded rationality theory 
A) Framing effects 
B) The law of large numbers 
C) The endowment effect 
D) Expected utility theory 
E) Bounded rationality theory

Question 2

Define the endowment effect and provide an example of this effect.

Accepted Answer

The endowment effect is the tendency to

Question 3

Price bundling is often used by firms to segregate consumer losses.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements about the concept of loss aversion, as it relates to the framing effect, is true?

Accepted Answer

A) Loss aversion implies that losses have a bigger impact on people, relative to equivalent gains. 
B) People tend to overestimate the likelihood of very small probabilities. 
C) Loss aversion can violate the dominance principle. 
D) Loss aversion implies that marketers should aggregate loses for customers. 
E) All of the above statements are true. 
A) Loss aversion implies that losses have a bigger impact on people, relative to equivalent gains. 
B) People tend to overestimate the likelihood of very small probabilities. 
C) Loss aversion can violate the dominance principle. 
D) Loss aversion implies that marketers should aggregate loses for customers. 
E) All of the above statements are true.

Question 5

Terri decides to take golf lessons and pays $300 for 10 lessons.After the 4th lesson, Terri has decided she hates golf.She continues to play (unhappily) saying, "I don't want to waste the $300!" Terri is experiencing the:

Accepted Answer

A) sunk cost effect 
B) endowment effect 
C) invariance effect 
D) brand positivity effect 
E) diminishing sensitivity effect 
A) sunk cost effect 
B) endowment effect 
C) invariance effect 
D) brand positivity effect 
E) diminishing sensitivity effect

Question 6

Consider the following example:
Imagine that Mary is planning a vacation and has to choose between two vacation spots.Based on the information, if asked to choose the best spot, which would Mary choose? If asked to reject a choice, which vacation spot would Mary reject? Why?
Spot A average weather average beaches
medium-quality hotel medium-temperature water average nightlife
Spot B lots of sunshine
gorgeous beaches and coral reefs ultra-modern hotel
very cold water very strong winds
no nightlife

Accepted Answer

In both choosing the best and rejecting

Question 7

Nick is consideriog buyiog a new bicycle.Here are his options: Bike A- costs $100.It has a 60% chance of breaking down in the next year.Bike B- costs $200.It has a 20% chance ofbreakiog down in the next year.Bike C- costs $400.It has a 15% chance ofbreakiog down in the next year.
Which bike should Nick purchase based on expected utility theory of repair costs?

Accepted Answer

A) Bike A 
B) BikeB 
C) Bike C 
D) Either bike A or C 
E) We can't possibly answer the question with the ioformation provided. 
A) Bike A 
B) BikeB 
C) Bike C 
D) Either bike A or C 
E) We can't possibly answer the question with the ioformation provided.

Question 8

In the endowment effect and the sunk cost effect, consumers underestimate:

Accepted Answer

A) motivation 
B) expected utility 
C) opportunity costs 
D) selective processing 
E) the diminishing sensitivity effect 
A) motivation 
B) expected utility 
C) opportunity costs 
D) selective processing 
E) the diminishing sensitivity effect

Question 9

Liz is considering buying a new refrigerator for $1,000.It has a 20% chance of requiring a repair in the next year.
The expected value in terms of repair costs for this purchase is $1,200.

Accepted Answer

A) True 
 B)False

Question 10

Consumers often overestimate the strength the relationship between price and quality, leading to an over-reliance on the price-quality heuristic.This is due to what phenomenon:

Accepted Answer

A) endowment effect 
B) dominance effect 
C) selecting thinking 
D) framing effect 
E) None of the above is correct. 
A) endowment effect 
B) dominance effect 
C) selecting thinking 
D) framing effect 
E) None of the above is correct.

Question 11

Rogaine (a hair replenishment product) uses the framing effect when it states that 26% of men who use the product get excellent results.

Accepted Answer

A) True 
 B)False

Question 12

Consumers are more likely to buy ground beef described as 75% lean as opposed to 25% fat.This is an example of which phenomenon?

Accepted Answer

A) Attraction effect 
B) Compromise effect 
C) Preference reversal 
D) Framing effect 
E) Endowment effect 
A) Attraction effect 
B) Compromise effect 
C) Preference reversal 
D) Framing effect 
E) Endowment effect

Question 13

Questions about money lead consumers to focus on money.Questions about probabilities lead consumers to focus on probabilities.This is the basis of what concept?

Accepted Answer

A) The compatibility principle 
B) Choice deferral 
C) The endowment effect 
D) Comparative evaluation 
E) The sunk cost effect 
A) The compatibility principle 
B) Choice deferral 
C) The endowment effect 
D) Comparative evaluation 
E) The sunk cost effect

Question 14

Nick is considering buying a new bicycle.Here are his options:
Bike A- costs $100.It has a 60% chance of breaking down in the next year.Bike B- costs $200.It has a 20% chance of breaking down in the next year.
Bike C- costs $400.It has a 15% chance of breaking down in the next year.
Which bike should Nick purchase based on expected utility theory of repair costs?

Accepted Answer

Nick should purchase

Question 15

The framing effect is in direct violation to the invariance principle.

Accepted Answer

A) True 
 B)False

Question 16

As part of expected utility theory, what principle states that preferences should remain the same no matter how preferences are measured and no matter how decision alternatives are described?

Accepted Answer

A) Probability principles 
B) Transitive principle 
C) Choice deferral principle 
D) Domination principle 
E) Invariance principle 
A) Probability principles 
B) Transitive principle 
C) Choice deferral principle 
D) Domination principle 
E) Invariance principle

Question 17

Which of the following is not a concept that helps explain the framing effect?

Accepted Answer

A) Diminishing sensitivity 
B) Transitivity 
C) Loss aversion 
D) Reference dependence 
E) Risk aversion 
A) Diminishing sensitivity 
B) Transitivity 
C) Loss aversion 
D) Reference dependence 
E) Risk aversion

Question 18

Sally buys a painting at a garage sale for $25.A houseguest sees the painting hanging in Sally's house and offers to buy the painting from her for $50.Sally does not want to sell the painting despite the fact that she would never pay this much for a similar painting.

Accepted Answer

A) sunk cost effect 
B) endowment effect 
C) compatibility principle 
D) brand positivity effect 
E) None of the above is correct. 
A) sunk cost effect 
B) endowment effect 
C) compatibility principle 
D) brand positivity effect 
E) None of the above is correct.

Question 19

The is the tendency to view a product as more valuable if one owns it.

Accepted Answer

A) sunk cost effect 
B) transitivity effect 
C) compatibility principle 
D) brand positivity effect 
E) None of the above is correct. 
A) sunk cost effect 
B) transitivity effect 
C) compatibility principle 
D) brand positivity effect 
E) None of the above is correct.

Question 20

Selective thinking influences the degree to which consumers rely on the price-quality heuristic.

Accepted Answer

A) True 
 B)False

suggest(s) all alternatives can be rank-ordered from worst to best and that alternatives with highest expected values should be preferred.

Define the endowment effect and provide an example of this effect.

Price bundling is often used by firms to segregate consumer losses.

Which of the following statements about the concept of loss aversion, as it relates to the framing effect, is true?

Terri decides to take golf lessons and pays $300 for 10 lessons.After the 4th lesson, Terri has decided she hates golf.She continues to play (unhappily) saying, "I don't want to waste the $300!" Terri is experiencing the:

In the endowment effect and the sunk cost effect, consumers underestimate:

Liz is considering buying a new refrigerator for $1,000.It has a 20% chance of requiring a repair in the next year. The expected value in terms of repair costs for this purchase is $1,200.

Consumers often overestimate the strength the relationship between price and quality, leading to an over-reliance on the price-quality heuristic.This is due to what phenomenon:

Rogaine (a hair replenishment product) uses the framing effect when it states that 26% of men who use the product get excellent results.

Consumers are more likely to buy ground beef described as 75% lean as opposed to 25% fat.This is an example of which phenomenon?

Questions about money lead consumers to focus on money.Questions about probabilities lead consumers to focus on probabilities.This is the basis of what concept?

The framing effect is in direct violation to the invariance principle.

As part of expected utility theory, what principle states that preferences should remain the same no matter how preferences are measured and no matter how decision alternatives are described?

Which of the following is not a concept that helps explain the framing effect?

Sally buys a painting at a garage sale for $25.A houseguest sees the painting hanging in Sally's house and offers to buy the painting from her for $50.Sally does not want to sell the painting despite the fact that she would never pay this much for a similar painting.

The is the tendency to view a product as more valuable if one owns it.

Selective thinking influences the degree to which consumers rely on the price-quality heuristic.

Understanding Consumer Behavior and Consumer Research

Consumer Focused Strategy: Segmentation and Positioning

Branding Strategy and Consumer Behavior

Consumer Perception

Learning and Memory

Automatic Information Processing

Motivation and Emotion

Attitude and Judgment Formation and Change

The Consumer Decision Making Process

Product Consideration, Evaluation, and Choice

Self-Concept and Personality

Social Influence and Behavioral Compliance

The Influence of Culture and Values

The Influence of Demography

Contemporary Strategies in Reaching Consumers

Engaging Consumers Through Online Marketing

Biases in Managerial Decision Making

Strategies for Improving Managerial Decision Making

Filters

Exam 11: Behavioral Decision Theory

suggest(s) all alternatives can be rank-ordered from worst to best and that alternatives with highest expected values should be preferred.

Define the endowment effect and provide an example of this effect.

Price bundling is often used by firms to segregate consumer losses.

Which of the following statements about the concept of loss aversion, as it relates to the framing effect, is true?

Terri decides to take golf lessons and pays $300 for 10 lessons.After the 4th lesson, Terri has decided she hates golf.She continues to play (unhappily) saying, "I don't want to waste the $300!" Terri is experiencing the:

In the endowment effect and the sunk cost effect, consumers underestimate:

Liz is considering buying a new refrigerator for $1,000.It has a 20% chance of requiring a repair in the next year. The expected value in terms of repair costs for this purchase is $1,200.

Consumers often overestimate the strength the relationship between price and quality, leading to an over-reliance on the price-quality heuristic.This is due to what phenomenon:

Rogaine (a hair replenishment product) uses the framing effect when it states that 26% of men who use the product get excellent results.

Consumers are more likely to buy ground beef described as 75% lean as opposed to 25% fat.This is an example of which phenomenon?

Questions about money lead consumers to focus on money.Questions about probabilities lead consumers to focus on probabilities.This is the basis of what concept?

The framing effect is in direct violation to the invariance principle.

As part of expected utility theory, what principle states that preferences should remain the same no matter how preferences are measured and no matter how decision alternatives are described?

Which of the following is not a concept that helps explain the framing effect?

Sally buys a painting at a garage sale for $25.A houseguest sees the painting hanging in Sally's house and offers to buy the painting from her for $50.Sally does not want to sell the painting despite the fact that she would never pay this much for a similar painting.

The is the tendency to view a product as more valuable if one owns it.

Selective thinking influences the degree to which consumers rely on the price-quality heuristic.

Understanding Consumer Behavior and Consumer Research

Consumer Focused Strategy: Segmentation and Positioning

Branding Strategy and Consumer Behavior

Consumer Perception

Learning and Memory

Automatic Information Processing

Motivation and Emotion

Attitude and Judgment Formation and Change

The Consumer Decision Making Process

Product Consideration, Evaluation, and Choice

Self-Concept and Personality

Social Influence and Behavioral Compliance

The Influence of Culture and Values

The Influence of Demography

Contemporary Strategies in Reaching Consumers

Engaging Consumers Through Online Marketing

Biases in Managerial Decision Making

Strategies for Improving Managerial Decision Making

Filters