Which of the following is an example of anchoring?

A) Sellers first showing expensive models before offering cheap options

What is the anchoring effect?

D) The tendency to rely too much on the first piece of information given

What is the main mistake people make when interpreting small sample sizes?

A) They assume small samples are more representative than they actually are

What is the “availability heuristic”?

A) Judging event frequency by how easily it comes to mind

Why do people overestimate the likelihood of dramatic events like plane crashes?

B) Because they are more memorable and available in memory

Why do people often believe in “hot streaks” in sports?

B) Because small sample sizes can create the illusion of patterns

Why do people often fail to recognize the unreliability of small sample sizes?

D) They intuitively believe that randomness evens out in all cases

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Behavioral Economics

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Questions 8

Answers

1
Which of the following is an example of anchoring?
C) A scientist rechecking their experiment multiple times
D) A company adjusting prices based on demand
A) Sellers first showing expensive models before offering cheap options
B) A student using multiple sources for research
2
What is the anchoring effect?
D) The tendency to rely too much on the first piece of information given
C) The tendency to forget past decisions
A) The ability to ignore irrelevant numbers
B) A strategy used in negotiations to avoid bias
3
What is the main mistake people make when interpreting small sample sizes?
A) They assume small samples are more representative than they actually are
D) They assume randomness is predictable
B) They ignore small samples entirely
C) They always distrust statistical data
4
What is the “availability heuristic”?
B) The ability to recall only recent memories
A) Judging event frequency by how easily it comes to mind
C) The tendency to avoid rare events
D) The strategy of making decisions based on logic rather than memory
5
Why do people overestimate the likelihood of dramatic events like plane crashes?
C) Because statistics support this belief
A) Because they happen more frequently than reported
B) Because they are more memorable and available in memory
D) Because they experience them personally
6
Which of the following best explains why people fear rare but dramatic risks over common, mundane ones?
C) The endowment effect
A) Probability neglect
B) Loss aversion
D) The hindsight bias
7
Why do people often believe in “hot streaks” in sports?
C) Because coaches train players differently
A) Because athletes actually improve over short periods
B) Because small sample sizes can create the illusion of patterns
D) Because randomness does not apply in sports
8
Why do people often fail to recognize the unreliability of small sample sizes?
D) They intuitively believe that randomness evens out in all cases
C) They assume larger samples are always biased
B) They believe smaller groups provide more accurate insights
A) They distrust statistics and prefer intuition

Behavioral Economics Flashcards | StudBud