QUESTION 26 Which of the following assumptions about human behavior is most like
ID: 1223444 • Letter: Q
Question
QUESTION 26
Which of the following assumptions about human behavior is most likely to be accepted by behavioral economists?
People eagerly and accurately calculate the benefits and costs of their decisions.
People have preferences that are unstable and vary by context.
People are almost entirely self-interested in their behavior.
People plan out decisions well and possess lots of willpower.
3 points
QUESTION 27
Behavioral economists believe that the human brain is generally:
inefficient but accurate.
efficient but prone to errors.
efficient and accurate.
inefficient and prone to errors.
3 points
QUESTION 28
When people convince themselves that they "knew all along" what was going to happen, when in fact their predictions were incorrect, they suffer from:
hindsight bias.
overconfidence bias.
framing bias.
self-serving bias.
3 points
QUESTION 29
According to the "endowment effect:"
the intensity of feelings from gains and losses depends on how much wealth one possesses.
people assign higher values to things they own than things they don't.
people feel gains and losses with equal intensity.
people are willing to pay more for things they don't own than they would have to receive to give up something they already have.
3 points
QUESTION 30
"Time inconsistency" refers to the:
tendency for policies with high short-run benefits to have high long-run costs.
tendency to misjudge how long it will take to accomplish a future task.
fallacy that what is true for the short run must be true for the long run.
tendency to regularly misjudge in the present what you will do in the future.
3 points
QUESTION 31
Results of the ultimatum game:
demonstrate that markets are generally inefficient.
contradict the metaphor of the invisible hand.
affirm the metaphor of the invisible hand.
suggest that governments are unnecessary.
3 points
QUESTION 32
Refer to Consider This (p. 181): The hedonic treadmill refers to a phenomenon where:
people can't improve their economic well-being because prices increase as fast as wages.
feelings of loss offset our feelings of gain, leaving us no happier in the long term.
increasing our level of consumption doesn't make us any happier in the long term.
people can't get out of debt because credit card companies use anchoring to get consumers to carry large balances on their accounts.
3 points
QUESTION 33
Heuristics help people make faster, error-free decisions.
True
False
1 points
QUESTION 34
Framing effects may cause the same person to view the same new situation differently depending on whether that new situation makes him or her better or worse off.
True
False
1 points
QUESTION 35
The endowment effect describes when people value a good more when they own it than when they don't.
True
False
1 points
QUESTION 36
Behavioral economics demonstrates that the threat of rejection makes people less likely to engage in transactions.
True
False
A.People eagerly and accurately calculate the benefits and costs of their decisions.
B.People have preferences that are unstable and vary by context.
C.People are almost entirely self-interested in their behavior.
D.People plan out decisions well and possess lots of willpower.
Explanation / Answer
26. b. People have preferences that are unstable and vary by context.
Behavioral economics is a subpart of microeconomics that states how individuals and organizations make economic decisions.
27. Efficient but prone to errors
According to behavioral economists people have good brain and knowledge but also have
Problem of making errors
28. Hindsight bias.
Hindsight bias is tendency of people to overestimate their ability to have predicated an outcome that could not possibly have been predicted.
29. b. People assign higher values to things they own than things they don't.
Endowment effect is the phenomenon in which most people would demand a considerably higher price for a product that they own than they would be prepared to pay for it
30. Tendency to misjudge how long it will take to accomplish a future task.
Time inconsistency is a situation that is fairly easy to describe, but fairly difficult to fully appreciate
. 31. affirm the metaphor of the invisible hand.
The first player (the proposer) receives a sum of money and proposes how to divide the sum between the proposer and the other player. The second player (the responder) chooses to either accept or reject this proposal.
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