Question 1

When it's not clear how to translate available information into something personally meaningful,it's:

Accepted Answer

A)  more likely you'll make a mistake in your choice. 
B)  less likely you'll make a mistake, given the amount of information. 
C)  more likely you'll invest more time in making your choice. 
D)  less likely the choice will have a big impact on you. 
A)  more likely you'll make a mistake in your choice. 
B)  less likely you'll make a mistake, given the amount of information. 
C)  more likely you'll invest more time in making your choice. 
D)  less likely the choice will have a big impact on you. A

Question 2

Cyndi says to you,"I'm wondering if I should study abroad in France." You studied in Germany two years ago,and found the cost of living (not counting tuition)to be about $5,000 for a semester,so you say,"I bet it will cost you about $5,000,not counting tuition." Your answer demonstrates:

Accepted Answer

A)  biased expectations. 
B)  anchoring. 
C)  using a piece of information loosely related and applying it to your guess. 
D)  All of these statements are true. 
A)  biased expectations. 
B)  anchoring. 
C)  using a piece of information loosely related and applying it to your guess. 
D)  All of these statements are true. B

Question 3

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. 
D)  for people to want to bestow their own beliefs on others when making decisions. 
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. 
D)  for people to want to bestow their own beliefs on others when making decisions. A

Question 4

Commitment devices:

Accepted Answer

A)  need strong commitments that are hard to get out of in order to be successful. 
B)  are never strong commitments that are hard to get out of. 
C)  can be successful whether they have strong or weak commitments. 
D)  are only successful if they are weak commitments that are easy to change. 
A)  need strong commitments that are hard to get out of in order to be successful. 
B)  are never strong commitments that are hard to get out of. 
C)  can be successful whether they have strong or weak commitments. 
D)  are only successful if they are weak commitments that are easy to change.

Question 5

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 6

John is buying a scented candle for his girlfriend.John thinks about her flower-scented perfume,flower-scented air spray,and flower-scented shampoo.He decides to buy her a flower-scented candle.His behavior is:

Accepted Answer

A)  using a heuristic called a rule of thumb. 
B)  an example of the endowment effect because she already has flower-scented goods. 
C)  an example of loss aversion because he doesn't want to make the wrong choice. 
D)  an example of status quo bias because he doesn't want to deviate from her normal choice of scent. 
A)  using a heuristic called a rule of thumb. 
B)  an example of the endowment effect because she already has flower-scented goods. 
C)  an example of loss aversion because he doesn't want to make the wrong choice. 
D)  an example of status quo bias because he doesn't want to deviate from her normal choice of scent.

Question 7

When shopping online,as part of the check-out process,companies often have a box checked automatically that states you want to receive promotional e-mails from them.The directions instruct you to uncheck the box if you do not wish such correspondence.This practice is a good example of:

Accepted Answer

A)  status-quo bias. 
B)  endowment bias. 
C)  endowment effect. 
D)  time inconsistency. 
A)  status-quo bias. 
B)  endowment bias. 
C)  endowment effect. 
D)  time inconsistency.

Question 8

The CARD Act,which tells credit card holders how long it will take to pay off their debt if they only make minimum payments,and how much they need to pay in order to pay off the debt in three years,is an example of:

Accepted Answer

A)  disclosing information in more usable ways. 
B)  choice architecture that nudges people toward better decisions. 
C)  how the presentation of information can affect people's choices. 
D)  All of these statements are true. 
A)  disclosing information in more usable ways. 
B)  choice architecture that nudges people toward better decisions. 
C)  how the presentation of information can affect people's choices. 
D)  All of these statements are true.

Question 9

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)  try to maximize; purposefully engage in less than optimal behavior. 
A)  try to maximize; make mistakes 
B)  try to minimize; maximize it 
C)  try to maximize; maximize their bad choices 
D)  try to maximize; purposefully engage in less than optimal behavior.

Question 10

The program Save More Tomorrow (SMarT)is:

Accepted Answer

A)  an experimental "forced savings" program. 
B)  the "forced savings" program in Italy. 
C)  a voluntary savings program that involves people learning how to find high-interest accounts so their savings is worth more tomorrow. 
D)  a voluntary savings program that commits a fraction of future raises to be put directly into savings. 
A)  an experimental "forced savings" program. 
B)  the "forced savings" program in Italy. 
C)  a voluntary savings program that involves people learning how to find high-interest accounts so their savings is worth more tomorrow. 
D)  a voluntary savings program that commits a fraction of future raises to be put directly into savings.

Question 11

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 12

Susie doesn't buy ice cream this week at the grocery store because she intends to start a diet in a few days.Her behavior is an example of:

Accepted Answer

A)  a commitment device. 
B)  status quo bias. 
C)  the endowment effect. 
D)  positive framing. 
A)  a commitment device. 
B)  status quo bias. 
C)  the endowment effect. 
D)  positive framing.

Question 13

When it comes to figuring out who wants to be an organ donor,the answer depends on:

Accepted Answer

A)  how you ask the question. 
B)  the default rule. 
C)  whether presumed consent exists in the organ donation program. 
D)  All of these statements are true. 
A)  how you ask the question. 
B)  the default rule. 
C)  whether presumed consent exists in the organ donation program. 
D)  All of these statements are true.

Question 14

Jim,an avid biker,broke his leg last year and will never be able to use his bike again.He was offered $100 for it last year,but Jim refused to sell it,insisting it was worth more.A year later,he's offered only $75 for it,but Jim still refuses to sell it.Jim's behavior could be explained by:

Accepted Answer

A)  limited processing power. 
B)  the endowment effect. 
C)  status quo bias. 
D)  substitution effect. 
A)  limited processing power. 
B)  the endowment effect. 
C)  status quo bias. 
D)  substitution effect.

Question 15

A choice architect is someone who:

Accepted Answer

A)  determines which choices are available to builders in a specific area. 
B)  designs areas that have a lot of choices in determining how the space is used. 
C)  is in a position to shape the decision-making environment. 
D)  determines how people should make decisions inside of a specific environment. 
A)  determines which choices are available to builders in a specific area. 
B)  designs areas that have a lot of choices in determining how the space is used. 
C)  is in a position to shape the decision-making environment. 
D)  determines how people should make decisions inside of a specific environment.

Question 16

The Save More Tomorrow (SMarT)program found all of the following except that:

Accepted Answer

A)  people want to save more than they typically do. 
B)  participants quadrupled their savings in just a couple of years. 
C)  if the default choice is to save a portion of income, people will save more. 
D)  people were already saving at an optimal amount, so the program had no effect. 
A)  people want to save more than they typically do. 
B)  participants quadrupled their savings in just a couple of years. 
C)  if the default choice is to save a portion of income, people will save more. 
D)  people were already saving at an optimal amount, so the program had no effect.

Question 17

When considering choice architecture,a nudge:

Accepted Answer

A)  allows participants to choose among only choices that are good for them. 
B)  can sometimes accomplish public policy goals in a less expensive way than traditional methods. 
C)  presents choices that are similar to participants' ideal choices, but are slightly better than them. 
D)  is a deliberate push by choice architect to get all people to behave a certain way. 
A)  allows participants to choose among only choices that are good for them. 
B)  can sometimes accomplish public policy goals in a less expensive way than traditional methods. 
C)  presents choices that are similar to participants' ideal choices, but are slightly better than them. 
D)  is a deliberate push by choice architect to get all people to behave a certain way.

Question 18

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 19

A default rule:

Accepted Answer

A)  is a consequence that users of commitment devices agree to if they fail to follow through with their commitment. 
B)  defines what will automatically occur if someone fails to make an active decision otherwise. 
C)  is a defined limit used to mark when someone is decidedly not making a good decision. 
D)  is the defined strength of a given commitment needed to get an individual to follow through with the commitment. 
A)  is a consequence that users of commitment devices agree to if they fail to follow through with their commitment. 
B)  defines what will automatically occur if someone fails to make an active decision otherwise. 
C)  is a defined limit used to mark when someone is decidedly not making a good decision. 
D)  is the defined strength of a given commitment needed to get an individual to follow through with the commitment.

Question 20

In the arena of decision making,status-quo bias means that the "â€˜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.

Exam 23: Public Policy and Choice Architecture

When it's not clear how to translate available information into something personally meaningful,it's:

Cyndi says to you,"I'm wondering if I should study abroad in France." You studied in Germany two years ago,and found the cost of living (not counting tuition)to be about $5,000 for a semester,so you say,"I bet it will cost you about $5,000,not counting tuition." Your answer demonstrates:

The endowment effect is the tendency:

Commitment devices:

Disclosing information in more usable ways to decision-makers:

John is buying a scented candle for his girlfriend.John thinks about her flower-scented perfume,flower-scented air spray,and flower-scented shampoo.He decides to buy her a flower-scented candle.His behavior is:

When shopping online,as part of the check-out process,companies often have a box checked automatically that states you want to receive promotional e-mails from them.The directions instruct you to uncheck the box if you do not wish such correspondence.This practice is a good example of:

The CARD Act,which tells credit card holders how long it will take to pay off their debt if they only make minimum payments,and how much they need to pay in order to pay off the debt in three years,is an example of:

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

The program Save More Tomorrow (SMarT)is:

Commitment devices can be:

Susie doesn't buy ice cream this week at the grocery store because she intends to start a diet in a few days.Her behavior is an example of:

When it comes to figuring out who wants to be an organ donor,the answer depends on:

Jim,an avid biker,broke his leg last year and will never be able to use his bike again.He was offered $100 for it last year,but Jim refused to sell it,insisting it was worth more.A year later,he's offered only $75 for it,but Jim still refuses to sell it.Jim's behavior could be explained by:

A choice architect is someone who:

The Save More Tomorrow (SMarT)program found all of the following except that:

When considering choice architecture,a nudge:

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 default rule:

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

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention Microeconomics

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

Filters

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