ECON 202 STUDY GUIDE
Test Bank: I Topic: Fairness and Self-Interest
Results of the ultimatum game
affirm the metaphor of the invisible hand.
contradict the metaphor of the invisible hand.
demonstrate that markets are generally inefficient.
suggest that governments are unnecessary.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Selfishness is
exhibited more strongly in the ultimatum gamethanin the dictatorgame.
B. exhibited more strongly in the dictator game than in the ultimatumgame.
exhibited equally strongly in both the ultimatumand dictator games.
rarely exhibited in either the ultimatum or dictatorgames.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
The ultimatum game reveals that thethreat of rejection
weakens the functioning of the invisible hand.
reduces cooperation.
increases selfish behavior.
D. helps align private interests with social interests.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Which of the followingbest describes the relationship between market transactions and the ultimatum anddictator games?
Market transactions operate more like the ultimatum gamethanthe dictator game.
Market transactions operate more like the dictator game than the ultimatum game.
The ultimatum anddictator games both provide goodrepresentations of how market transactions work.
Neither the ultimatum game nor the dictator game bears much similarity tomarket transactions.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
The threat of rejection in market transactions
leads to better products for consumers.
leads tolower prices for consumers.
leads togreater cooperation between buyers andsellers.
D. does all of these.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
The threat of rejectionin market transactions
A. leads to higher prices, as sellers try to cover possible losses.
B. leads to better productsand lower prices for consumers.
leads toless cooperation betweenbuyers and sellers.
does all of these.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy Gradable: automatic
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
(Consider This) According to the piece "Wannamaker's Lament,"
price tags are inefficient signaling mechanisms.
money-back guarantees are costly tofirms because they don't increasesales but do increase costs.
C. most marketing efforts have little impacton sales.
D. only 50 percent of new consumer productsfail within the first year.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium Gradable: automatic
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
(Consider This) According to the piece "Wannamaker's Lament," how havefirms responded to theevidence that most advertising campaigns have littleimpact on sales?
Firms have substantially cut their advertising budgets to focus more on product quality.
Firms have substantially increased their advertising budgets in order tohit thespending threshold necessaryto affect sales.
Firms have substantially cut their advertising budgets tofocus more on new product development.
D. Firms have conducted a lot of simple experiments to determine what might increase sales.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium Gradable: automatic
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
(Consider This) Kara was earning $40,000 per year. When her income rose to $60,000per year, she enjoyedthehigher level of consumption for a while, but eventually shewas nomorehappy than when sheearned $40,000 (assume prices didn't change over this time period). Economist Richard Easterlin described this as
anchoring.
the endowment effect.
irrational economic behavior.
D. the hedonic treadmill.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium Gradable: automatic
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
(Consider This) The hedonic treadmill refers to a phenomenon where
people can't improvetheir economic well-being because prices increase asfast as wages.
people can't get outof debt because creditcard companies use anchoring to get consumers tocarry 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.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium Gradable: automatic
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
(Consider This) In sunny parts of the country, solar panels generatenetfinancial benefits in just a fewyears, despite having high installation costs.Despite their long-runprofitability, the high upfront costs discourage many from installing solar panels.From a behavioral economicsperspective, this is the result of
A. myopia.
time inconsistency.
status quo bias.
the endowment effect.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
(Consider This) Solar City helped homeowners overcome their myopia by
providing improved information about the benefits of solar systems.
framing the installation of solar systems against the environmental costs of nonrenewable energy sources.
C. eliminating the upfront costs of solar systems.
D. appealing to homeowners’ sense of fairness with regard toenvironmental responsibility.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
(Last Word) The United Kingdom’s Behavioral InsightsTeam substantially increased the amount of income tax collected each year by
A. printing frowning face emoticons on correspondence to delinquent payers.
B. mailing letters to those who had not yet paid, tellingthem that their neighbors had paid.
establishing an automaticpayroll withdrawal system tocollect taxes.
sending delinquent payers pictures of poor children.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
(Last Word) "Nudges" refer to
A. subtle changes in policies or practicesthat result in large behavioral changes.
legal changes made without much publicity that require significant changes in behavior.
coercion by governmental authorities.
changes in endowments that significantly alter behavior.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
(Last Word) The BIT helped poorpeople in thePhilippines increase their saving by offering “commitment” savingsaccounts that restricted withdrawals until certaindates or savingstargets were reached. This is an example of
A. a nudge.
anchoring.
mental accounting.
endowment effects.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium Gradable: automatic
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
True / False Questions
Both neoclassical and behavioral economics believethat people are mostly rationalin both their decision making and their actions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Behavioral economists believe that while people try to makerational decisions, they are frequently subject tosystematic errors.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Behavioral economics recognizes that people frequentlymake errors, but theseerrors generally cancel out in such a way that neoclassical models are sufficient for predicting economic outcomes.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Neoclassical and behavioral economics are generallyviewed as complementary.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
A key difference between neoclassical economics andbehavioral economics is that in behavioral economics, context affects preferences.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Behavioral economics observes that people generally do not act according totheir self-interest.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Neoclassical economics and behavioral economics both recognize that people make errors intheir decision making.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
According to behavioral economics, temptation to make harmful decisionscan be overcome by presenting decision makers with better information andmore options.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Neoclassical theory suggests that tothe extent impulse buying occurs, itis infrequent and doesnot affect the ability of economic models to predict behavior.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Placement of goods in groceryand other retail stores is often done with the objective of encouraging impulse buying.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 02 Medium
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: I Topic: Systematic Errors and the Origin of Behavioral Economics
Heuristics generally help people make fewer errors in their decisions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Heuristics generally help people make faster decisions.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Heuristics generally help people to make decisionsfaster, but also tomake more errors.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Heuristics help people make faster, error-free decisions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Recognition heuristics help advertisers gain customers.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Heuristics generally operate in brain System 2.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Hardwired heuristics make it easy to change behaviorby simply presenting people with better information.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Heuristics can be exploitedto lead people to positive outcomes.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Between System 1 andSystem 2 in the brain, System 1 makes most of the decisions.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
System 1 is the part of the brain that carefullyweighs the benefits and costs when making decisions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
The availability heuristicrefers to people purchasingwhat is most easily accessible.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
The self-serving bias causes people to act only in their self-interest.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
The overconfidence effect exists when people underestimate their chances of being wrong.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Framing effects may cause the same personto view the same new situationdifferently depending on whether that new situationmakes him or her better or worse off.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
The presence of framingeffects influenceshow sellers presenttheir products to consumers.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-02 Discuss the evidence for the brain being modular, computationally restricted, reliant on heuristics, and pronetovarious forms of cognitive error.
Test Bank: I Topic: Our Efficient, Error-Prone Brains
Prospect theory andthe work of behavioral economistsconfirm that consumers are economically rational.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
People feel losses about twoanda half times more intensely than they feel gains.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
Firms would rather shrink package sizes than raise prices becauseconsumers will feel less ofa loss from the change in package size.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
Because of framingeffects, a worker will be happy with a 5 percent raise regardless of how much of a raise her fellow employeesreceive.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
Anchoring leads people to considerirrelevant information when making decisions.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
Isolating transactions from the overall set of consumption options is known as anchoring.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
The endowment effect describes when people value a good more when they own it than when they don't.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
People who engage in mental accountingare more likely topurchase overpriced warranties.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective: 08-03 Relate how prospect theory helpstoexplain many consumer behaviors, including framing effects,mental accounting, anchoring, loss aversion,and the endowment effect.
Test Bank: I Topic: Prospect Theory
According to behavioral economists, people tend to put toomuchweight on the future when they make decisions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
Time inconsistency refers to thephenomenon where your presentself misjudges what your future self will do.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
Time inconsistency refers to thepersistent underestimation of how long a task will taketo perform.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
According to behavioral economists, self-control problems generally resultfrom poor information.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
Precommitments must impose costs on people to be effective.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
Precommitments are a tool designed toovercome time inconsistency.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Understand Difficulty:02 Medium
Learning Objective:08-04 Describe how time inconsistency and myopia cause peopletomake suboptimal long-run decisions.
Test Bank: I Topic: Myopia and Time Inconsistency
Behavioral economists avoid dealing with fairnessconcerns because theconcept is too subjective.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Dictators/proposers tend to act more self-interested when playingthe dictator game versus the ultimatum game.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
The dictator and ultimatum games reveal that fairnessand concern for others motivatepeople's behavior.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Results of the dictator and ultimatum games reveal that people act in equallyself-interested ways, regardless of the contextor rules of the game.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Behavioral economics demonstrates that the threat of rejection makes people less likely toengage in transactions.
FA LSE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
The threat of rejection is part of what makes the invisible hand a valid metaphor for how the market system works.
TRUE
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective:08-05 Define fairness and give examples of how it affects behavior in the economyandin the dictator andultimatum games.
Test Bank: I Topic: Fairness and Self-Interest
Multiple Choice Questions
Behavioral economics attempts to makebetter predictions about human behaviorby combining insights from the following fields, except
economics.
biology.
C. physics.
D. psychology.
AACSB: Knowledge ApplicationAccessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
Learning Objective: 08-01 Define behavioraleconomics and explain how it contrasts with neoclassicaleconomics.
Test Bank: II Topic: Systematic Errors and the Origin of Behavioral Economics
Neoclassical economics tends to makeinaccurate predictions of human behavior in situations involving