Question 1

According to behavioral economics research, in which of the following cases would we expect a person to experience no net change in their utility?

Accepted Answer

A)  When the person gains $100 and loses $100.
B)  When the person gains $250 and loses $100.
C)  When the person gains $100 and loses $250.
D)  When the person gains $100 while everyone else gains $200.E) None of the above
F) C) and D)

Question 2

Heuristics

Accepted Answer

A)  are rules of thumb that generate decisions that generally maximize net benefits.
B)  take a long time to develop and are therefore avoided by rational decision makers.
C)  are shortcuts that save time and energy in decision making.
D)  always waste mental resources by leading people to suboptimal outcomes.E) A) and B)
F) All of the above

Question 3

The tendency of people to discount long-term values more than they do near-term values-making many people "future blind"- is known in behavioral economics as

Accepted Answer

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

Question 4

According to behavioral economics, placement of goods in retail stores is often designed to accomplish which of the following?

Accepted Answer

A)  maximize impulse buying by consumers
B)  minimize shelving costs
C)  maximize convenience for customers
D)  maximize the amount of product the store can displayE) B) and C)
F) C) and D)

Question 5

Heuristics generally help people make faster decisions.

Accepted Answer

A) True 
 B)False

Question 6

When people make decisions that go against their own interests, neoclassical economics explains this to be instances where people are

Accepted Answer

A)  intentionally not maximizing their net benefit.
B)  ignorant of what their best interests are.
C)  simply incapable of making rational decisions.
D)  behaving quite rationally.E) A) and C)
F) None of the above

Question 7

Suppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $30 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur?

Accepted Answer

A)  $30 for Justine and $0 for Sarah
B)  $16 for Justine and $14 for Sarah
C)  $20 for Justine and $10 for Sarah
D)  $0 for Justine and $30 for SarahE) None of the above
F) All of the above

Question 8

Define behavioral economics, and discuss why it was developed.

Accepted Answer

Behavioral economics is a branch of econ...

Question 9

Firms would rather shrink package sizes than raise prices because consumers will feel less of a loss from the change in package size.

Accepted Answer

A) True 
 B)False

Question 10

Internationally, participation differences in organ donation programs are mostly attributed to

Accepted Answer

A)  cultural views.
B)  financial compensation for organ donors.
C)  what default option is set for participation or nonparticipation.
D)  living standards as measured by per capita GDP.E) B) and C)
F) A) and D)

Question 11

Suppose Gina and Henry play two rounds of the ultimatum game. In the first round they play for $10; in the second round they play for $1,000. In the first round Gina suggests an 80/20 split ($8 to Gina, $2 to Henry) , but Henry quickly rejects the offer as unfair. If in the second round Gina offers the same split ($800 to Gina, $200 to Henry) , research by behavioral economists suggests that Henry will

Accepted Answer

A)  accept the offer because the dollar amount he would forgo by rejecting is substantial.
B)  counteroffer with a more even split.
C)  weigh the offer much more carefully because of the dollar amounts involved but ultimately reject the offer.
D)  exhibit a stronger negative reaction than the first time and ultimately reject the offer.E) None of the above
F) All of the above

Question 12

One important consequence of the self-serving bias is that

Accepted Answer

A)  some people cannot correct a personal trait that might be causing them to fail in many ventures.
B)  someone could persist in pursuing a failed policy despite overwhelming evidence of the failure.
C)  bad decisions can be made because people will act without pausing to see whether their intuition is correct or not.
D)  some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments.E) A) and C)
F) B) and D)

Question 13

One major consequence of the overconfidence effect is that

Accepted Answer

A)  some people cannot correct a personal trait that might be causing them to fail in many ventures.
B)  someone could persist in pursuing a failed policy despite overwhelming evidence of the failure.
C)  bad decisions can be made because people will act without pausing to see whether their intuition is correct or not.
D)  some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments.E) A) and C)
F) A) and B)

Question 14

Why, according to behavioral economics, would supermarkets place gum, candy, and other small convenience items near the cash registers?

Accepted Answer

A)  Those are the shelving locations that minimize costs.
B)  Stores try to make frequently purchased items quicker and easier for consumers to access.
C)  Smaller items tend to fall through shopping cart holes, so stores reduce that problem for consumers by having smaller items at the checkout stands.
D)  Many of these are small items that people will buy on an impulse.E) A) and B)
F) A) and C)

Question 15

Describe what is meant by nudging.

Accepted Answer

A key feature of "nudges" is that they a...

Question 16

Anchoring leads people to consider irrelevant information when making decisions.

Accepted Answer

A) True 
 B)False

Question 17

Huxley lost $100 in the stock market. According to behavioral economics research, how much of a gain would he have to experience to offset the feeling of loss and have no net change in utility?

Accepted Answer

A)  $100
B)  $250
C)  $40
D)  $150E) C) and D)
F) All of the above

Question 18

Heuristics generally help people make fewer errors in their decisions.

Accepted Answer

A) True 
 B)False

Question 19

The idea of "nudging" people into certain choices is one major contribution of behavioral economics to policy making.

Accepted Answer

A) True 
 B)False

Question 20

The hedonic treadmill refers to a phenomenon where

Accepted Answer

A)  people can't improve their economic well-being because prices increase as fast as wages.
B)  people can't get out of debt because credit card companies use anchoring to get consumers to carry large balances on their accounts.
C)  increasing our level of consumption doesn't make us any happier in the long term.
D)  feelings of loss offset our feelings of gain, leaving us no happier in the long term.E) A) and B)
F) A) and C)

Exam 8: Behavioral Economics

Describe what is meant by nudging.

Correct Answer
verified
A key feature of "nudges" is that they a...
View Answer

Heuristics

Correct Answer
verified

According to behavioral economics research, in which of the following cases would we expect a person to experience no net change in their utility?

Correct Answer
verified

According to behavioral economics, placement of goods in retail stores is often designed to accomplish which of the following?

Correct Answer
verified

The idea of "nudging" people into certain choices is one major contribution of behavioral economics to policy making.

Correct Answer
verified

Define behavioral economics, and discuss why it was developed.

Correct Answer
verified
Behavioral economics is a branch of econ...
View Answer

One major consequence of the overconfidence effect is that

Correct Answer
verified

Huxley lost $100 in the stock market. According to behavioral economics research, how much of a gain would he have to experience to offset the feeling of loss and have no net change in utility?

Correct Answer
verified

The tendency of people to discount long-term values more than they do near-term values-making many people "future blind"- is known in behavioral economics as

Correct Answer
verified

Why, according to behavioral economics, would supermarkets place gum, candy, and other small convenience items near the cash registers?

Correct Answer
verified

The hedonic treadmill refers to a phenomenon where

Correct Answer
verified

Heuristics generally help people make fewer errors in their decisions.

Correct Answer
verified

Heuristics generally help people make faster decisions.

Correct Answer
verified

One important consequence of the self-serving bias is that

Correct Answer
verified

Suppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $30 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur?

Correct Answer
verified

Correct Answer
verified

Internationally, participation differences in organ donation programs are mostly attributed to

Correct Answer
verified

Firms would rather shrink package sizes than raise prices because consumers will feel less of a loss from the change in package size.

Correct Answer
verified

When people make decisions that go against their own interests, neoclassical economics explains this to be instances where people are

Correct Answer
verified

Anchoring leads people to consider irrelevant information when making decisions.

Correct Answer
verified

Exam 8: Behavioral Economics

Describe what is meant by nudging.

Correct AnswerverifiedA key feature of "nudges" is that they a...View AnswerShow Answer

Heuristics

Correct AnswerverifiedShow Answer

According to behavioral economics research, in which of the following cases would we expect a person to experience no net change in their utility?

Correct AnswerverifiedShow Answer

According to behavioral economics, placement of goods in retail stores is often designed to accomplish which of the following?

Correct AnswerverifiedShow Answer

The idea of "nudging" people into certain choices is one major contribution of behavioral economics to policy making.

Correct AnswerverifiedShow Answer

Define behavioral economics, and discuss why it was developed.

Correct AnswerverifiedBehavioral economics is a branch of econ...View AnswerShow Answer

One major consequence of the overconfidence effect is that

Correct AnswerverifiedShow Answer

Huxley lost $100 in the stock market. According to behavioral economics research, how much of a gain would he have to experience to offset the feeling of loss and have no net change in utility?

Correct AnswerverifiedShow Answer

The tendency of people to discount long-term values more than they do near-term values-making many people "future blind"- is known in behavioral economics as

Correct AnswerverifiedShow Answer

Why, according to behavioral economics, would supermarkets place gum, candy, and other small convenience items near the cash registers?

Correct AnswerverifiedShow Answer

The hedonic treadmill refers to a phenomenon where

Correct AnswerverifiedShow Answer

Heuristics generally help people make fewer errors in their decisions.

Correct AnswerverifiedShow Answer

Heuristics generally help people make faster decisions.

Correct AnswerverifiedShow Answer

One important consequence of the self-serving bias is that

Correct AnswerverifiedShow Answer

Suppose Justine and Sarah are playing the ultimatum game. Justine is the proposer, has $30 to allocate, and Sarah can accept or reject the offer. Based on repeated experiments of the ultimatum game, what combination of payouts to Justine and Sarah is most likely to occur?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Internationally, participation differences in organ donation programs are mostly attributed to

Correct AnswerverifiedShow Answer

Firms would rather shrink package sizes than raise prices because consumers will feel less of a loss from the change in package size.

Correct AnswerverifiedShow Answer

When people make decisions that go against their own interests, neoclassical economics explains this to be instances where people are

Correct AnswerverifiedShow Answer

Anchoring leads people to consider irrelevant information when making decisions.

Correct AnswerverifiedShow Answer

Correct Answer
verified
A key feature of "nudges" is that they a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Behavioral economics is a branch of econ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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