Question 1

Behavioral economists put significant emphasis on using models to

Accepted Answer

A)  predict decisions, but not so much to understand how those decisions are made.
B)  predict decisions and also to understand how those decisions are made.
C)  understand decision processes, but not the prediction of the decision itself.
D)  understand people's actions, but not what drives people to act in certain ways.E) C) and D)
F) None of the above

Question 2

Which of the following statements about behavioral economics is not true?

Accepted Answer

A)  Its insights help policymakers determine how to nudge people to make certain choices.
B)  It combines insights from economics, psychology, and neuroscience to better understand how people behave.
C)  It assumes that people are always rational, deliberate, and objective in their choices.
D)  It studies how people deal with choices involving "goods" as well as "bads."E) None of the above
F) B) and C)

Question 3

Specialty shops can charge and get customers to pay higher prices for identical goods than they would pay in "big box" stores.Assuming that these differences are driven by store appearance rather than differences in services provided, which of the following best explains this phenomenon?

Accepted Answer

A)  availability heuristics
B)  framing effects
C)  confirmation biases
D)  self-serving biasesE) All of the above
F) C) and D)

Question 4

Behavioral economists criticize neoclassical models as being

Accepted Answer

A)  messy and imprecise.
B)  accurate but artificially elegant.
C)  precise but inaccurate.
D)  vague but accurate.E) A) and B)
F) C) and D)

Question 5

Bucky and Satchel are offered identical jobs, each paying $80,000 per year.According to behavioral economics,

Accepted Answer

A)  they should feel equally good about the job offer.
B)  how each will feel about the job offer will depend on their current positions and incomes.
C)  if Bucky's current income is $60,000 per year, and Satchel's is $70,000 per year, we would expect Bucky to receive twice as much additional utility from taking the job as Satchel would.
D)  if the jobs will not change their income, they are more likely to switch jobs than remain with the status quo.E) A) and D)
F) None of the above

Question 6

Time inconsistency refers to the persistent underestimation of how long a task will take to perform.

Accepted Answer

A) True 
 B)False

Question 7

Fatal automobile accidents occur much more frequently than do fatal airplane crashes, yet airplane crashes receive a disproportionate amount of media coverage.As a result, some people are overly fearful of flying in planes yet have no problem riding in cars.Which of the following cognitive biases best explains this disconnect between these people's fears and the statistical realities?

Accepted Answer

A)  overconfidence effect
B)  availability heuristic
C)  self-serving bias
D)  confirmation biasE) All of the above
F) B) and C)

Question 8

Neoclassical economists generally believe which of the following about human behavior?

Accepted Answer

A)  While individuals attempt to make rational decisions, poor computational skills often lead to systematic err ors.
B)  People care a lot about fairness and are often willing to sacrifice some of their own well-being to treat others fairly.
C)  When individuals make mistakes in decision making, they adjust to these errors and rarely repeat them.
D)  When individuals are selfless and act for the good of others, the invisible hand guides the collective behaviors to promote the good of society.E) A) and D)
F) C) and D)

Question 9

One consequence of the confirmation bias is that many people believe that they could "beat the (stock) market."

Accepted Answer

A) True 
 B)False

Question 10

The tendency of people to misjudge, at the present time, what they will want to do or have at some future time is called

Accepted Answer

A)  time inconsistency.
B)  mental accounting.
C)  anchoring.
D)  framing.E) None of the above
F) B) and D)

Question 11

The status quo effect suggests that giving people more options is always good for them.

Accepted Answer

A) True 
 B)False

Question 12

Some behavioral economists explain the so-called endowment effect to be a consequence of people's tendency to

Accepted Answer

A)  feel gains more intensely than losses.
B)  feel losses more intensely than gains.
C)  focus mentally on a recently viewed number.
D)  feel strongly about fairness and generosity.E) B) and C)
F) A) and D)

Question 13

The tendency of people to overestimate the value of their possessions when, say, considering such value for insurance purposes is known in prospect theory as the

Accepted Answer

A)  anchoring effect.
B)  endowment effect.
C)  status quo bias.
D)  confirmation bias.E) A) and B)
F) None of the above

Question 14

According to behavioral economists, people tend to put too much weight on the future when they make decisions.

Accepted Answer

A) True 
 B)False

Question 15

In the financial crisis that precipitated the 2007-2009 recession, people systematically overestimated their prospects for financial gain.Which branch of economics would most likely have expected to predict this?

Accepted Answer

A)  neoclassical economics
B)  Keynesian economics
C)  behavioral economics
D)  classical economicsE) All of the above
F) None of the above

Question 16

Behavioral economists have found that one major explanation for the intercountry differences in participation rates in organ-donation programs is

Accepted Answer

A)  the anchoring effect.
B)  the mental accounting effect.
C)  status quo bias.
D)  confirmation bias.E) A) and D)
F) All of the above

Question 17

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Accepted Answer

A) True 
 B)False

Question 18

The oft heard "I knew it all along" comment that many people make illustrates the

Accepted Answer

A)  confirmation bias.
B)  framing effect.
C)  hindsight bias.
D)  self-serving bias.E) A) and B)
F) C) and D)

Question 19

Neoclassical economics assumes that people have the following characteristics, except

Accepted Answer

A)  they are stable and definite in their tastes and preferences.
B)  they are as good at assessing future options as they are in assessing current ones.
C)  they are driven by their pursuit of maximum satisfaction.
D)  they care deeply about fairness and are often generous.E) B) and D)
F) A) and D)

Question 20

"Heuristics" used by the human brain are one of the reasons why

Accepted Answer

A)  our preferences are quite stable and consistent.
B)  neoclassical economic models accurately predict human behavior.
C)  human perception is susceptible to context and prone to error.
D)  the utility-maximizing model of decision making is precise.E) All of the above
F) B) and C)

Exam 8: Behavioral Economics

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Correct Answer
verified

Neoclassical economists generally believe which of the following about human behavior?

Correct Answer
verified

In the financial crisis that precipitated the 2007-2009 recession, people systematically overestimated their prospects for financial gain.Which branch of economics would most likely have expected to predict this?

Correct Answer
verified

The tendency of people to overestimate the value of their possessions when, say, considering such value for insurance purposes is known in prospect theory as the

Correct Answer
verified

Specialty shops can charge and get customers to pay higher prices for identical goods than they would pay in "big box" stores.Assuming that these differences are driven by store appearance rather than differences in services provided, which of the following best explains this phenomenon?

Correct Answer
verified

"Heuristics" used by the human brain are one of the reasons why

Correct Answer
verified

One consequence of the confirmation bias is that many people believe that they could "beat the (stock) market."

Correct Answer
verified

Behavioral economists put significant emphasis on using models to

Correct Answer
verified

According to behavioral economists, people tend to put too much weight on the future when they make decisions.

Correct Answer
verified

Bucky and Satchel are offered identical jobs, each paying $80,000 per year.According to behavioral economics,

Correct Answer
verified

Behavioral economists have found that one major explanation for the intercountry differences in participation rates in organ-donation programs is

Correct Answer
verified

Correct Answer
verified

Some behavioral economists explain the so-called endowment effect to be a consequence of people's tendency to

Correct Answer
verified

Neoclassical economics assumes that people have the following characteristics, except

Correct Answer
verified

The oft heard "I knew it all along" comment that many people make illustrates the

Correct Answer
verified

Time inconsistency refers to the persistent underestimation of how long a task will take to perform.

Correct Answer
verified

Which of the following statements about behavioral economics is not true?

Correct Answer
verified

The status quo effect suggests that giving people more options is always good for them.

Correct Answer
verified

The tendency of people to misjudge, at the present time, what they will want to do or have at some future time is called

Correct Answer
verified

Behavioral economists criticize neoclassical models as being

Correct Answer
verified

Exam 8: Behavioral Economics

Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.

Correct AnswerverifiedShow Answer

Neoclassical economists generally believe which of the following about human behavior?

Correct AnswerverifiedShow Answer

In the financial crisis that precipitated the 2007-2009 recession, people systematically overestimated their prospects for financial gain.Which branch of economics would most likely have expected to predict this?

Correct AnswerverifiedShow Answer

The tendency of people to overestimate the value of their possessions when, say, considering such value for insurance purposes is known in prospect theory as the

Correct AnswerverifiedShow Answer

Specialty shops can charge and get customers to pay higher prices for identical goods than they would pay in "big box" stores.Assuming that these differences are driven by store appearance rather than differences in services provided, which of the following best explains this phenomenon?

Correct AnswerverifiedShow Answer

"Heuristics" used by the human brain are one of the reasons why

Correct AnswerverifiedShow Answer

One consequence of the confirmation bias is that many people believe that they could "beat the (stock) market."

Correct AnswerverifiedShow Answer

Behavioral economists put significant emphasis on using models to

Correct AnswerverifiedShow Answer

According to behavioral economists, people tend to put too much weight on the future when they make decisions.

Correct AnswerverifiedShow Answer

Bucky and Satchel are offered identical jobs, each paying $80,000 per year.According to behavioral economics,

Correct AnswerverifiedShow Answer

Behavioral economists have found that one major explanation for the intercountry differences in participation rates in organ-donation programs is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some behavioral economists explain the so-called endowment effect to be a consequence of people's tendency to

Correct AnswerverifiedShow Answer

Neoclassical economics assumes that people have the following characteristics, except

Correct AnswerverifiedShow Answer

The oft heard "I knew it all along" comment that many people make illustrates the

Correct AnswerverifiedShow Answer

Time inconsistency refers to the persistent underestimation of how long a task will take to perform.

Correct AnswerverifiedShow Answer

Which of the following statements about behavioral economics is not true?

Correct AnswerverifiedShow Answer

The status quo effect suggests that giving people more options is always good for them.

Correct AnswerverifiedShow Answer

The tendency of people to misjudge, at the present time, what they will want to do or have at some future time is called

Correct AnswerverifiedShow Answer

Behavioral economists criticize neoclassical models as being

Correct AnswerverifiedShow Answer

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