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Exam 23: Public Policy and Choice Architecture

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Question 21

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An important category of bias in human decision-making is:

A) temptation.
B) revealed preference.
C) ease of the decision-making process.
D) All of these are important sources of bias in decision-making.

E) A) and D)
F) A) and C)

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Question 22

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Suppose studies show that only 15 percent of all teens wear their bike helmets while riding their bikes. If policymakers wish for more teens to wear their bike helmets, they should create a public service announcement that:

A) brings attention to the fact that many teens act unsafely by not wearing a helmet.
B) urges teens to wear helmets, without disclosing the fact that a majority of teens do not wear helmets.
C) informs parents that most teens do not wear bike helmets.
D) shares the statistic, although it's impossible to predict whether this will actually influence behavior.

E) C) and D)
F) A) and B)

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Question 23

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Suppose Maya announces that she would like to make healthier choices, but she does not follow through on actually making these choices. Traditional economic theory would conclude that: Maya's revealed behavior shows that the benefits of altered behavior must not outweigh the costs. Maya made a bad choice. Maya has incorrect preferences.

Jian receives a letter from his alma mater asking him to donate to the university. The letter lists suggested donation amounts with boxes next to each that Jian can check off to indicate how much he wants to donate. This letter is an example of:

Camille and Priya are talking over coffee. Camille mentions that she is considering spending a semester studying abroad in France. Priya studied abroad for a semester in Germany two years ago, and during that time her cost of living (not counting tuition) was about $5,000. Priya tells Camille that a semester abroad in France will probably cost her around $5,000, not counting tuition. Priya's comment demonstrates:

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

Amanda, who lives in Vermont, is visiting California for the first time. At home, Amanda always goes jogging early in the morning because it's hottest in the early afternoon. Not knowing what to expect of the weather in California, she decides to go jogging in the early morning during her visit. This decision is an example of:

Setting up automatic payroll deductions to put a portion of your pay into a "Christmas account" is an example of:

Choice architects are likely to make program participation:

A local government is considering replacing a public park with a new administrative building and decides to survey the city's residents. The citizens are asked how much they would be willing to pay in increased taxes to keep the public park and also how much they would be willing to receive in a tax refund in order to accept the destruction of the park. The citizens report that they would be willing to pay on average $25 each to keep the public park, but they would need to receive on average $50 in a tax refund to accept the destruction of the park. This illustrates:

Loss aversion is:

Agreeing to accompany a friend to the gym for daily workouts is an example of:

Suppose you are in charge of marketing for a pharmaceutical company. You are trying to decide how to market the company's newest drug. You could say, "Nine out of ten users experienced elimination of all symptoms after one week." Or you could say, "Only one out of ten users was still experiencing symptoms after one week." Knowing that individuals are influenced by _______, you will likely choose the _______ option.

Choice architecture can:

Commitment devices are:

A default rule:

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 guess by adding a few cents to the current price of gas, your answer would exhibit:

Jim, an avid biker, breaks his leg and will never be able to bike again. An acquaintance offers to buy the bike for $100, but Jim refuses to sell it, insisting it is worth more. A year later, someone offers to buy the bike for $75, but Jim still refuses to sell it. Jim's behavior could be explained by:

The Save More Tomorrow (SMarT) program offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account. Which of the following was not a finding of this program?