Due to hedonic adaptation, what do you expect would happen to Anu's level of happiness after buying a new jacket?

It would initially increase, then return to a baseline level

People are compelled to buy MORE stuff for all of the following reasons EXCEPT...

Scientific research proves that the more items we own, the happier we are

Which of the following best describes what a cognitive bias is?

An error in the way we think that can influence our decisions

Which of the following is an example of how someone’s PHYSICAL values can influence their financial decisions?

Jessie gets a massage every month as a form of self-care

Each of the following statements is an example of confirmation bias EXCEPT...

Seeking information that challenges your beliefs

Learning about hedonic adaptation, Tamara wants to spend her money better Which of the following might help her do so?

Donating money to a charity that supports a cause she cares about

All of the following explain why humans might "follow the herd" EXCEPT...

People prefer having opinions that are very different from those of others

After the meeting she reads FB comments that complain about high taxes in town. She agrees. To avoid confirmation bias

Seek out comments that support the increase to provide alt. viewpoint

Which of the following actions is the BEST way to counteract loss aversion when making a decision?

Evaluate the decision to focus on the gains instead of potential

Herd mentality may explain why...

Ben went to see a movie with his friends even though he didnt like the genr

Which of the following scenarios BEST demonstrates FOMO (Fear of Missing Out)?

José wants to see a movie that his friends have seen and are raving about

When using social media, it's important to remember that...

People mostly only post about the best parts of their lives on social media

Unlike traditional economics, behavioral economics believes that…

People dont always behave in a rational way when making economic decisions

People who experience FOMO may...

Go into debt to keep up with everyone else

You spend a day looking for a used car You test drive a few.None fit your budget.What is the sunk cost you should ingore

The time you spent looking for cars that day

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NGPF Behavioral Economics Unit 1

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Answers

1
Due to hedonic adaptation, what do you expect would happen to Anu's level of happiness after buying a new jacket?
It would initially increase, then return to a baseline level
It would remain at a baseline level, then increase over time
It would remain at a baseline level, then decrease over time
It would initially decrease, then return to a baseline level
2
People are compelled to buy MORE stuff for all of the following reasons EXCEPT...
Once the initial novelty of a purchase wears off we buy the next thing
Scientific research proves that the more items we own, the happier we are
We tend to want more compared to those around us
The media portrays that the more stuff we have, the happier we will be
3
Which of the following best describes what a cognitive bias is?
The belief that we are right until someone can contradicts our belief
A rational decision that is based on research and facts
An error in the way we think that can influence our decisions
The belief that a person should change their opinions when new facts arise
4
Which of the following is an example of how someone’s PHYSICAL values can influence their financial decisions?
Sophie shops for clothes at the thrift stores and finds good deals to save
Jessie gets a massage every month as a form of self-care
Bob has two offers and decides on that offers satisfaction over better pay
Ben puts 20% into a savings account because that’s what his mom does
5
Each of the following statements is an example of confirmation bias EXCEPT...
Interpreting information to support your existing beliefs
Ignoring information that challenges your beliefs
Seeking information that challenges your beliefs
Only remembering details that uphold your beliefs
6
Michael observed he felt the pain of losing $20 more than he felt the joy of finding it on the sidewalk the week before.
Overconfidence
Endowment effect
Loss aversion
Sunk cost
7
Learning about hedonic adaptation, Tamara wants to spend her money better Which of the following might help her do so?
Buying a new laptop even though her current one still works well
Donating money to a charity that supports a cause she cares about
Purchasing a dress after seeing an ad on social media
Getting a new phone accessory for her phone case
8
All of the following explain why humans might "follow the herd" EXCEPT...
People prefer having opinions that are very different from those of others
It can be uncomfortable standing out from the crowd
Humans evolved to stick with the herd to survive
Fighting social pressure can be difficult to do
9
After the meeting she reads FB comments that complain about high taxes in town. She agrees. To avoid confirmation bias
Allow others to make the decision because she is too biased
Seek out comments that support the increase to provide alt. viewpoint
Avoid social media since it will influence her decision
Join a FB group that organizes citizens that are opp. to the tax increase
10
Which of the following actions is the BEST way to counteract loss aversion when making a decision?
Making the choice that takes on the most risk possible
Polling a bunch of your friends and family to see what they would decide
Dwelling on the potential loss you may experience for several days
Evaluate the decision to focus on the gains instead of potential
11
Which of the following is the LEAST likely to influence a person’s financial decisions?
What their family’s needs are
What their friends want
What their budget is
What their values are
12
A stock that has a price of $50/share.The price immediate drops If you are affected by loss aversion you would be likely
Buy more shares
Look for other stocks to buy
Do nothing
Sell the shares
13
Herd mentality may explain why...
Ben bought a shirt he liked from an unpopular brand
Bob decided to keep his phone even though his friends bought the new versio
Bob chose to skip dinner with friends and watched a movie at home instead
Ben went to see a movie with his friends even though he didnt like the genr
14
Your friend gives you an item. Later they offer to trade you another item of similar value.The endowment effect means
They think looks the best
They could sell for the most
They were offered second
They received first
15
Which of the following scenarios BEST demonstrates FOMO (Fear of Missing Out)?
Angela sees an advertisement for a pair of shoes and decides to buy them
José wants to see a movie that his friends have seen and are raving about
Megan takes a baking class after seeing a sign for it
David goes on a vacation and posts about it on social media every day
16
1. You see a sports card but dont buy it 2. You find a sports card in your attic, you display itThis is an example of
Confirmation bias
The Fear of Missing Out (FOMO)
Overconfidence
Endowment effect
17
You only visit the car companys website and an online message board of electric car enthusiasts This may lead to
Confirmation bias
Loss aversion
Herd mentality
The endowment effect
18
A website tells you, "Only one left!" while shopping online. Which loss aversion strategy is this website using?
Free trials and samples
Buy now, get free shipping
Scarcity and urgency
Coupons
19
Bob trades stocks. He made a profit. He believes he is a great trader. He now puts his lifes savings in the market.
Overconfidence Bias
Confirmation Bias
The Endowment Effect
The Fear of Missing Out (FOMO)
20
Investments of time, effort, and money that cannot be recovered are...
Opportunity costs
Avoidable costs
Relevant costs
Sunk costs
21
When using social media, it's important to remember that...
Social media ads are trying to get you to buy stuff you NEED, not want
People mostly only post about the best parts of their lives on social media
Marketers have your best interests in mind
The more likes the more trustworthy the information is likely to be
22
Unlike traditional economics, behavioral economics believes that…
People dont always behave in a rational way when making economic decisions
There is no way to predict how people will make economic decisions
People will always update their viewpoints based on new information
People behave in a rational way when making economic decisions
23
People who experience FOMO may...
Go into debt to keep up with everyone else
Create and stick to a monthly budget
Donate money to a cause they care about
Save a percentage of their paycheck each month
24
You spend a day looking for a used car You test drive a few.None fit your budget.What is the sunk cost you should ingore
The cost of the car
The time you spent looking for cars that day
The cost of the warranty
The time it will take to drive home
25
Overconfidence bias may lead the majority of Americans to think that they are…
Extremely poor drivers
Above average drivers
Average drivers
Below average drivers

NGPF Behavioral Economics Unit 1 Flashcards | StudBud