Deck 17: Social Psychology and Behavioral

Question 1

Which of the following describes how people make predictable mistakes when trying to weigh outcomes and probabilities

A) prospect theory
B) rational economic thinking
C) bounded rationality
D) irrational economic thinking

Answer 1

prospect theory

Question 2

A new game show asks two strangers to negotiate with one another to determine whether they will split a shared prize or whether they will steal the prize only for themselves. If both decide to split, then prize money is split. If one decides to steal, then the stealer wins the entire prize. If both decide to steal, then no one wins. What does this exemplify

A) the Prisoner's Dilemma
B) the Ultimatum game
C) rational economic thinking
D) prospect theory

Answer 2

the Prisoner's Dilemma

Question 3

Which of the following relies on the strict rules of supply and demand

A) loss aversion
B) irrational economic thinking
C) bounded rationality
D) rational economic thinking

Answer 3

rational economic thinking

Question 4

What is the belief that lowering taxes can actually increase tax revenues

A) behavioral economics
B) prospect theory
C) supply side economics
D) game theory

Question 5

Aria is a college student living on a strict budget. She goes to the mall with friends and resolves to not spend any money but finds a scarf that she really likes. Pragmatically, she knows she cannot afford the scarf, but she still wants to buy it. This example shows ______.

A) the boundary between Aria's rational and irrational economic thought
B) the natural cognitive limits of Aria's ability to make a rational economic decision
C) how Aria makes predictable mistakes when weighing outcomes and probabilities
D) how Aria uses the standard economic model in practice

Question 6

Game theory can force our ______ to the surface of behavior by creating scenarios with uncertain outcomes.

A) loss aversion
B) irrational economic thinking
C) internal values
D) bounded rationality

Question 7

The prisoner's dilemma exemplifies the effect of ______.

A) independent decision-making
B) interdependent decision-making
C) fairness that is quantified
D) supply chain economics

Question 8

Which of the following would explain why the risk of losing money would keep someone from investing in the stock market

A) rational economic thinking
B) prospect theory
C) bounded rationality
D) loss aversion

Question 9

One could reasonably say that the behavioral economic model ______ the standard economic model

A) contrasts
B) extends
C) limits
D) mirrors

Question 10

Corrigan is creating a study researching whether close personal relationships influence whether people choose to cooperate or compete for financial gains. Which of the following could Corrigan use in his study

A) the Prisoner's Dilemma
B) the Ultimatum game
C) rational economic thinking
D) prospect theory

Question 11

Which of the following describes how thoughts are influenced by mental shortcuts, misperception, and emotional biases

A) loss aversion
B) irrational economic thinking
C) rational economic thinking
D) prospect theory

Question 12

Which of the following describes the tendency for potential losses to be more psychologically influential that potential gains

A) loss aversion
B) prospect theory
C) bounded rationality
D) rational economic thinking

Question 13

Which of the following describes the study of how economic decisions are influenced by psychological factors

A) behavioral economics
B) prospect theory
C) rational economic thinking
D) irrational economic thinking

Question 14

Which of the following tests whether people value cooperation or competition

A) rational economic thinking
B) prospect theory
C) bounded rationality
D) game theory

Question 15

What is an assumption of the standard economic model

A) People are always rational.
B) People are usually irrational.
C) People are affected by losses rather than gains.
D) People rarely adhere to supply and demand.

Question 16

Sebastian is a negotiator for a large retail chain. During a negotiation for the best rate on pants, he gets into a heated argument with a supplier. Even though this supplier provides the highest quality, lowest cost pants, Sebastian refuses to do business with them and buys the pants for a more expensive rate elsewhere. What does this exemplify

A) prospect theory
B) rational economic thinking
C) irrational economic thinking
D) bounded rationality

Question 17

Mateo is a social psychologist who studies behaviors and psychological factors that influence how people choose items they will buy or sell. Which of the following does Mateo study

A) standard economic model
B) behavioral economics
C) loss aversion
D) bounded rationality

Question 18

Behavioral economics was born in the aftermath of which war

A) World War I
B) World War II
C) Vietnam
D) Korean War

Question 19

Which of the following describes that there is a limit to our ability to make rational economic decisions

A) rational economic thinking
B) prospect theory
C) behavioral economics
D) bounded rationality

Question 20

You have been in a serious relationship for 5 years and are considering proposing to your partner. Which of the following is an action that you might choose according to standard game theory

A) You propose because a rejection will not cost you much money.
B) You put off proposing because of potential rejection.
C) You propose because your love for your partner outweighs the potential pain of rejection.
D) You put off proposing because you will feel humiliated if you are rejected.

Question 21

Standard game theory emphasizes rationality.

Question 22

Compare and contrast the standard economic model and behavioral economic.

Question 23

Psychology did not exist when economic philosophy was created.

Question 24

Standard game theory is based on the behavioral economic model.

Question 25

How does reputation affect the ultimatum game scenario?

Question 26

The most efficient tax policy is one that understands human motivation.

Question 27

The ultimatum game is a scenario that evaluates the value participants place on which of the following

A) cooperation
B) competition
C) fairness
D) power

Question 28

The Laffer curve specifies a tax rate in which people are motivated to work and maximizes tax revenue.

Question 29

Irrational economic thinking notes that decision-making relies heavily on strict economic rules.

Question 30

What can the ultimatum game be used to research?

Question 31

Create and describe your own example of the prisoner's dilemma.

Question 32

With which of the following is the Laffer curve associated

A) bounded rationality
B) loss aversion
C) supply side economics
D) internal values

Question 33

Behavioral game theory postulates that lowering taxes can increase tax revenues.

Question 34

Which of the following is based on standard economic theory

A) standard game theory
B) behavioral game theory
C) interdependent decision-making
D) Prisoner's dilemma

Question 35

Supply side economics postulates that there is a tax policy between 0% and 100% that ______.

A) motivates people to work
B) minimizes tax revenues
C) stabilizes the economy
D) benefits suppliers of goods

Question 36

How did the Treaty of Versailles after World War I influence the formation of behavioral economics?

Question 37

Early economists understood that economic decisions could be influenced by human passions.

Question 38

The economic debate is actually a ______ challenge.

A) loss aversion
B) rational
C) standard economic model
D) psychological

Question 39

Behavioral economics combines psychology and economics.

Question 40

The standard economic model and the behavioral economic model are in constant struggle with one another.