Question 1

Carlos and Darla are playing the dictator game. Carlos is assigned the role of dictator and given $20 to split between the two of them. Based on previous experiments with this game, if Carlos is a typical player, behavioral economists would expect

Accepted Answer

A)  Carlos to keep all of the money for himself.
B)  Carlos to give all of the money to Darla.
C)  Carlos to split the money evenly with Darla.
D)  Carlos to split the money, keeping a little more than half for himself.E) B) and D)
F) B) and C)

Question 2

What behaviors are common among the players of the ultimatum game?

Accepted Answer

Two behaviors are common in the ultimatu...

Question 3

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

Accepted Answer

A) True 
 B)False

Question 4

Framing effects in prospect theory indicate that a given result, such as "an investment return of 10 percent,"

Accepted Answer

A)  will be definitely viewed as a gain, because a loss would be a negative return.
B)  can be viewed as either a gain or a loss, depending on the context.
C)  will always increase the happiness of the investor.
D)  will change satisfaction to an equal but opposite degree as a negative 10 percent return.E) A) and B)
F) All of the above

Question 5

Suppose Justine and Sarah are playing the dictator game. Justine is the dictator and has $100 to allocate. Based on repeated experiments of the dictator game, what is the least likely outcome for this game?

Accepted Answer

A)  $100 for Justine and $0 for Sarah.
B)  $58 for Justine and $42 for Sarah.
C)  $50 for Justine and $50 for Sarah.
D)  $0 for Justine and $100 for Sarah.E) B) and C)
F) A) and C)

Question 6

Which of the following is the best example of a precommitment used to overcome time inconsistency?

Accepted Answer

A)  finding a running partner and setting a regular schedule of when you will run together
B)  deciding to save a percentage of each month's paycheck
C)  signing up for a free trial membership at the local gym
D)  buying an alarm clockE) B) and C)
F) C) and D)

Question 7

Results of the dictator and ultimatum games reveal that people act in equally self-interested ways, regardless of the context or rules of the game.

Accepted Answer

A) True 
 B)False

Question 8

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 D)
F) None of the above

Question 9

A key difference between neoclassical economics and behavioral economics is that in behavioral economics, context affects preferences.

Accepted Answer

A) True 
 B)False

Question 10

Sellers' sense of fairness in pricing can sometimes lead them to pricing decisions that do not maximize profits.

Accepted Answer

A) True 
 B)False

Question 11

Most people's natural aversion against complex mathematical problems is an example of

Accepted Answer

A)  confirmation bias.
B)  a mental heuristic.
C)  rational choice.
D)  cognitive bias.E) C) and D)
F) B) and C)

Question 12

Some economists suggest that we should use the insights of behavioral economics to

Accepted Answer

A)  coerce people to make decisions toward improving their happiness.
B)  design elaborate rules to restrict individuals' chances of hurting themselves.
C)  nudge people toward choices that improve their welfare or that of others.
D)  provide huge monetary incentives to people to move them to action.E) C) and D)
F) A) and D)

Question 13

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

Accepted Answer

A)  distributing online coupons
B)  providing discounts for buying in bulk
C)  positioning frequently purchased items at the back of the store
D)  offering price matching with other storesE) A) and B)
F) None of the above

Question 14

According to prospect theory, people tend to favor default options. This is known as the

Accepted Answer

A)  self-serving bias.
B)  availability heuristic.
C)  status quo bias.
D)  framing bias.E) A) and B)
F) All of the above

Question 15

The results of running the dictator game experiments thousands of times have revealed to behavioral economists that

Accepted Answer

A)  people's sense of fairness is fairly uniform across the population.
B)  most people have little concern for others when it comes to financial matters.
C)  individual feelings about fairness and generosity vary widely across the population.
D)  most people are willing to give more than they will keep for themselves.E) A) and B)
F) B) and C)

Question 16

"Impulse buying" is often the result of a

Accepted Answer

A)  rational optimizing decision in response to incentives and prices.
B)  precise estimation of one's marginal utilities and price comparisons.
C)  systematic nonrational behavior that marketers can take advantage of.
D)  random error in a consumer's behavior that is not predictable.E) A) and B)
F) A) and D)

Question 17

Behavioral economics recognizes that people frequently make errors, but these errors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.

Accepted Answer

A) True 
 B)False

Question 18

Dorothy likes to invest in gold as part of her overall financial investment portfolio, as her gut tells her it will increase dramatically in value. Her favorite and generally only source of investment advice is Wizard's Gold Hour on the OZ cable channel. As a result of this advice, Dorothy's portfolio mix is suboptimal, as it is too heavily weighted in gold. Behavioral economists would say that Dorothy suffers from

Accepted Answer

A)  framing effects.
B)  confirmation bias.
C)  self-serving bias.
D)  planning fallacy.E) All of the above
F) None of the above

Question 19

The tendency of people to underestimate the time required to complete a task is called the

Accepted Answer

A)  planning fallacy.
B)  framing effect.
C)  hindsight bias.
D)  availability heuristic.E) All of the above
F) None of the above

Question 20

The ultimatum game reveals that the threat of rejection

Accepted Answer

A)  weakens the functioning of the invisible hand.
B)  reduces cooperation.
C)  increases selfish behavior.
D)  helps align private interests with social interests.E) A) and B)
F) All of the above

Exam 8: Behavioral Economics

Sellers' sense of fairness in pricing can sometimes lead them to pricing decisions that do not maximize profits.

Correct Answer
verified

Which of the following is the best example of a precommitment used to overcome time inconsistency?

Correct Answer
verified

Framing effects in prospect theory indicate that a given result, such as "an investment return of 10 percent,"

Correct Answer
verified

Suppose Justine and Sarah are playing the dictator game. Justine is the dictator and has $100 to allocate. Based on repeated experiments of the dictator game, what is the least likely outcome for this game?

Correct Answer
verified

"Impulse buying" is often the result of a

Correct Answer
verified

Results of the dictator and ultimatum games reveal that people act in equally self-interested ways, regardless of the context or rules of the game.

Correct Answer
verified

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

Correct Answer
verified

The results of running the dictator game experiments thousands of times have revealed to behavioral economists that

Correct Answer
verified

What behaviors are common among the players of the ultimatum game?

Correct Answer
verified
Two behaviors are common in the ultimatu...
View Answer

Carlos and Darla are playing the dictator game. Carlos is assigned the role of dictator and given $20 to split between the two of them. Based on previous experiments with this game, if Carlos is a typical player, behavioral economists would expect

Correct Answer
verified

Most people's natural aversion against complex mathematical problems is an example of

Correct Answer
verified

Correct Answer
verified

Some economists suggest that we should use the insights of behavioral economics to

Correct Answer
verified

According to prospect theory, people tend to favor default options. This is known as the

Correct Answer
verified

The ultimatum game reveals that the threat of rejection

Correct Answer
verified

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

Correct Answer
verified

Behavioral economists criticize neoclassical models as being

Correct Answer
verified

Behavioral economics recognizes that people frequently make errors, but these errors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.

Correct Answer
verified

A key difference between neoclassical economics and behavioral economics is that in behavioral economics, context affects preferences.

Correct Answer
verified

The tendency of people to underestimate the time required to complete a task is called the

Correct Answer
verified

Exam 8: Behavioral Economics

Sellers' sense of fairness in pricing can sometimes lead them to pricing decisions that do not maximize profits.

Correct AnswerverifiedShow Answer

Which of the following is the best example of a precommitment used to overcome time inconsistency?

Correct AnswerverifiedShow Answer

Framing effects in prospect theory indicate that a given result, such as "an investment return of 10 percent,"

Correct AnswerverifiedShow Answer

Suppose Justine and Sarah are playing the dictator game. Justine is the dictator and has $100 to allocate. Based on repeated experiments of the dictator game, what is the least likely outcome for this game?

Correct AnswerverifiedShow Answer

"Impulse buying" is often the result of a

Correct AnswerverifiedShow Answer

Results of the dictator and ultimatum games reveal that people act in equally self-interested ways, regardless of the context or rules of the game.

Correct AnswerverifiedShow Answer

System 1 is the part of the brain that carefully weighs the benefits and costs when making decisions.

Correct AnswerverifiedShow Answer

The results of running the dictator game experiments thousands of times have revealed to behavioral economists that

Correct AnswerverifiedShow Answer

What behaviors are common among the players of the ultimatum game?

Correct AnswerverifiedTwo behaviors are common in the ultimatu...View AnswerShow Answer

Carlos and Darla are playing the dictator game. Carlos is assigned the role of dictator and given $20 to split between the two of them. Based on previous experiments with this game, if Carlos is a typical player, behavioral economists would expect

Correct AnswerverifiedShow Answer

Most people's natural aversion against complex mathematical problems is an example of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some economists suggest that we should use the insights of behavioral economics to

Correct AnswerverifiedShow Answer

According to prospect theory, people tend to favor default options. This is known as the

Correct AnswerverifiedShow Answer

The ultimatum game reveals that the threat of rejection

Correct AnswerverifiedShow Answer

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

Correct AnswerverifiedShow Answer

Behavioral economists criticize neoclassical models as being

Correct AnswerverifiedShow Answer

Behavioral economics recognizes that people frequently make errors, but these errors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.

Correct AnswerverifiedShow Answer

A key difference between neoclassical economics and behavioral economics is that in behavioral economics, context affects preferences.

Correct AnswerverifiedShow Answer

The tendency of people to underestimate the time required to complete a task is called the

Correct AnswerverifiedShow Answer

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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Two behaviors are common in the ultimatu...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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