Question 1

The Save More Tomorrow (SMarT)program is an example of a:

Accepted Answer

A) weak commitment device that was successful. 
B) strong commitment device that was successful. 
C) weak commitment device that was unsuccessful. 
D) strong commitment device that was unsuccessful. 
A) weak commitment device that was successful. 
B) strong commitment device that was successful. 
C) weak commitment device that was unsuccessful. 
D) strong commitment device that was unsuccessful. A

Question 2

Suppose you were asked,"Can you guess the height of the tallest living man? Is it more than 8 feet?" When people suggest an answer in the question they ask,it is a form of:

Accepted Answer

A) anchoring. 
B) rule of thumb. 
C) time inconsistency. 
D) positive framing. 
A) anchoring. 
B) rule of thumb. 
C) time inconsistency. 
D) positive framing. A

Question 3

Suppose studies showed that 12 percent of all teens choose to participate in underage drinking.If policymakers wish to reduce the amount of underage drinking,they should:

Accepted Answer

A) let teens know that the great majority of teens currently do not drink. 
B) not share that statistic,and let teens think that it's a huge problem with all teens. 
C) Informing them will have no impact on their individual behavior. 
D) The statistic is likely to influence their personal decision,but it is impossible to predict in what way without more information. 
A) let teens know that the great majority of teens currently do not drink. 
B) not share that statistic,and let teens think that it's a huge problem with all teens. 
C) Informing them will have no impact on their individual behavior. 
D) The statistic is likely to influence their personal decision,but it is impossible to predict in what way without more information. A

Question 4

The concept of loss aversion is:

Accepted Answer

A) a general tendency for people to put more effort into avoiding losses than achieving gains. 
B) preferring certain outcomes over uncertain ones. 
C) a general tendency for people to put more effort into achieving gains than avoiding losses. 
D) a spectrum of tolerance for risky situations. 
A) a general tendency for people to put more effort into avoiding losses than achieving gains. 
B) preferring certain outcomes over uncertain ones. 
C) a general tendency for people to put more effort into achieving gains than avoiding losses. 
D) a spectrum of tolerance for risky situations.

Question 5

Behavioral economists accept that people ___________ their well-being but sometimes ________________.

Accepted Answer

A) try to maximize;make mistakes 
B) try to minimize;maximize it 
C) try to maximize;maximize their bad choices 
D) None of these statements is true. 
A) try to maximize;make mistakes 
B) try to minimize;maximize it 
C) try to maximize;maximize their bad choices 
D) None of these statements is true.

Question 6

An example of a heuristic is:

Accepted Answer

A) a rule of thumb. 
B) predatory lending. 
C) common sense. 
D) All of these are heuristics. 
A) a rule of thumb. 
B) predatory lending. 
C) common sense. 
D) All of these are heuristics.

Question 7

The endowment effect is the tendency:

Accepted Answer

A) to place a higher value on something a person already owns simply because they own it. 
B) to have a harder time parting with wealth people have held the longer the amount of time they hold it. 
C) for a person to believe they hold a particular skill because someone told them they do,regardless of who person is telling them. 
D) None of these statements is true. 
A) to place a higher value on something a person already owns simply because they own it. 
B) to have a harder time parting with wealth people have held the longer the amount of time they hold it. 
C) for a person to believe they hold a particular skill because someone told them they do,regardless of who person is telling them. 
D) None of these statements is true.

Question 8

In the arena of decision making,the choice that will automatically take place if the chooser fails to make an active decision is called:

Accepted Answer

A) status-quo bias. 
B) processing power bias. 
C) choice bias. 
D) auto bias. 
A) status-quo bias. 
B) processing power bias. 
C) choice bias. 
D) auto bias.

Question 9

Commitment devices are:

Accepted Answer

A) methods to increase the price of your vices. 
B) methods to lower the price of your virtues. 
C) successful whether weak or strong,depending on the situation. 
D) All of these statements are true. 
A) methods to increase the price of your vices. 
B) methods to lower the price of your virtues. 
C) successful whether weak or strong,depending on the situation. 
D) All of these statements are true.

Question 10

In the arena of decision making,status-quo bias means that the "'default'" option:

Accepted Answer

A) has a lot of power. 
B) is most likely to be chosen. 
C) Is the one that will automatically take place if the chooser fails to make an active decision. 
D) All of these statements are true. 
A) has a lot of power. 
B) is most likely to be chosen. 
C) Is the one that will automatically take place if the chooser fails to make an active decision. 
D) All of these statements are true.

Question 11

The success of the SMarT program has proven that changing the way we present options can:

Accepted Answer

A) affect people's behavior. 
B) help them overcome mental biases. 
C) avoid regret. 
D) All of these statements are true. 
A) affect people's behavior. 
B) help them overcome mental biases. 
C) avoid regret. 
D) All of these statements are true.

Question 12

Disclosing information in more usable ways to decision-makers:

Accepted Answer

A) can nudge people toward making better decisions. 
B) effectively eliminates certain choices from a person's options. 
C) will never affect a person's decision. 
D) increases instances of rational ignorance. 
A) can nudge people toward making better decisions. 
B) effectively eliminates certain choices from a person's options. 
C) will never affect a person's decision. 
D) increases instances of rational ignorance.

Question 13

A mistake is a choice that:

Accepted Answer

A) the chooser later regrets. 
B) the choice architect creates that has unintended consequences. 
C) society as a whole,but not necessarily the chooser,is left worse-off once it's made. 
D) policymakers think choosers should not make. 
A) the chooser later regrets. 
B) the choice architect creates that has unintended consequences. 
C) society as a whole,but not necessarily the chooser,is left worse-off once it's made. 
D) policymakers think choosers should not make.

Question 14

Commitment devices can be:

Accepted Answer

A) a tool to help people avoid temptation. 
B) an informal arrangement. 
C) formal policies set up through an employer or third party. 
D) All of these statements are true. 
A) a tool to help people avoid temptation. 
B) an informal arrangement. 
C) formal policies set up through an employer or third party. 
D) All of these statements are true.

Question 15

We're more likely to make mistakes with situations we face:

Accepted Answer

A) often,because we pay less attention. 
B) often,because they involve low payoffs. 
C) infrequently. 
D) with little warning. 
A) often,because we pay less attention. 
B) often,because they involve low payoffs. 
C) infrequently. 
D) with little warning.

Question 16

Suppose studies showed that only 15 percent of all teens wear their bike helmets while riding their bikes.If policymakers wish to have more teens wear their bike helmets,they should:

Accepted Answer

A) inform teens of the social norm. 
B) not inform teens of the social norm. 
C) Informing them of the social norm will have no impact on their individual situation. 
D) The statistic is likely to influence their personal decision,but it is impossible to predict in what way without more information. 
A) inform teens of the social norm. 
B) not inform teens of the social norm. 
C) Informing them of the social norm will have no impact on their individual situation. 
D) The statistic is likely to influence their personal decision,but it is impossible to predict in what way without more information.

Question 17

A choice architect is someone who:

Accepted Answer

A) is in a position to shape the decision-making environment. 
B) determines which choices are available to builders in a specific area. 
C) designs areas that have a lot of choices in determining how the space is used. 
D) None of these statements is true. 
A) is in a position to shape the decision-making environment. 
B) determines which choices are available to builders in a specific area. 
C) designs areas that have a lot of choices in determining how the space is used. 
D) None of these statements is true.

Question 18

A person cutting up their credit cards in an effort to curb their spending is an example of:

Accepted Answer

A) a commitment device. 
B) status quo bias. 
C) the endowment effect. 
D) loss aversion. 
A) a commitment device. 
B) status quo bias. 
C) the endowment effect. 
D) loss aversion.

Question 19

When we study choice architecture,we recognize that people make:

Accepted Answer

A) mistakes in common and predictable ways. 
B) choices that rarely maximize their well-being. 
C) mistakes in seemingly random ways. 
D) choices which always maximize their well-being. 
A) mistakes in common and predictable ways. 
B) choices that rarely maximize their well-being. 
C) mistakes in seemingly random ways. 
D) choices which always maximize their well-being.

Question 20

If someone asked you to predict the price of gas in a month,and you decided to just guess by adding a few cents to the current price of gas,which you know,your answer would exhibit:

Accepted Answer

A) anchoring. 
B) time inconsistency. 
C) rational expectations. 
D) None of these statements is true. 
A) anchoring. 
B) time inconsistency. 
C) rational expectations. 
D) None of these statements is true.

Exam 23: Public Policy and Choice Architecture

The Save More Tomorrow (SMarT)program is an example of a:

Suppose you were asked,"Can you guess the height of the tallest living man? Is it more than 8 feet?" When people suggest an answer in the question they ask,it is a form of:

Suppose studies showed that 12 percent of all teens choose to participate in underage drinking.If policymakers wish to reduce the amount of underage drinking,they should:

The concept of loss aversion is:

Behavioral economists accept that people ___________ their well-being but sometimes ________________.

An example of a heuristic is:

The endowment effect is the tendency:

In the arena of decision making,the choice that will automatically take place if the chooser fails to make an active decision is called:

Commitment devices are:

In the arena of decision making,status-quo bias means that the "'default'" option:

The success of the SMarT program has proven that changing the way we present options can:

Disclosing information in more usable ways to decision-makers:

A mistake is a choice that:

Commitment devices can be:

We're more likely to make mistakes with situations we face:

Suppose studies showed that only 15 percent of all teens wear their bike helmets while riding their bikes.If policymakers wish to have more teens wear their bike helmets,they should:

A choice architect is someone who:

A person cutting up their credit cards in an effort to curb their spending is an example of:

When we study choice architecture,we recognize that people make:

If someone asked you to predict the price of gas in a month,and you decided to just guess by adding a few cents to the current price of gas,which you know,your answer would exhibit:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: A Closer Look at Decision Making

Game Theory and Strategic Thinking

Information

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Factors of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Measuring the Wealth of Nations

The Cost of Living

Economic Growth

Unemployment and the Demand for Labor

Aggregate Demand and Aggregate Supply

Fiscal Policy

The Basics of Finance

Money and the Monetary System

Inflation

Financial Crisis

Open-Market Macroeconomics

Development Economics

Filters

Behavioral economists accept that people _ their well-being but sometimes ______.