This quiz works best with JavaScript enabled. Home > Economics > Behavioral Economics > Behavioral Economics – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Economics Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The amount of pain (or pleasure) we get from feeling like we paid more (or less) than something is really worth A) Sunk Cost Fallacy. B) Mental Accounting. C) Confirmation Bias. D) Transaction Utility. Show Answer Correct Answer: D) Transaction Utility. 2. When a person mistakenly believes they are better than others A) Overplacement. B) Overprecision. C) Overnight Test. D) Sunk Costs. Show Answer Correct Answer: A) Overplacement. 3. Jed said, "I made a budget for myself in my personal finance class and used my values to decide how I want to use my money." What does Jed mean by this? A) Jed asked his friends and family for advice to decide how to use his money. B) Jed identified what is important to him and used that knowledge to decide how to use his money. C) Jed followed recommendations he saw on social media to decide how to use his money. D) Jed used the value of his bank account balance to decide how to use his money. Show Answer Correct Answer: B) Jed identified what is important to him and used that knowledge to decide how to use his money. 4. Confirmation Bias A) Only confirming what we want to believe or think thats true. B) Confirming every question you think. C) Information that solves formulas. D) Thinking every question we have is true. Show Answer Correct Answer: A) Only confirming what we want to believe or think thats true. 5. Ally signs up for a Netflix trial. Because she "owns" a full account, she places high value on it and signs up. This is A) Loss Aversion. B) Herd Mentality. C) Overprecision. D) The Endowment Effect. Show Answer Correct Answer: D) The Endowment Effect. 6. Choose the cognitive bias that is described below:Consumers are attracted towards goods or services that people queue up for or that the majority are using. A) Loss aversion. B) Sunk Cost Bias. C) Endowment Bias. D) Bandwagon Effect. Show Answer Correct Answer: D) Bandwagon Effect. 7. Paul is doing research on a new electric car that he is interested in buying. He only visits the car company's website and an online message board of electric car enthusiasts to do his research. This strategy may lead to ..... A) Confirmation bias. B) Loss aversion. C) The endowment effect. D) Herd mentality. Show Answer Correct Answer: A) Confirmation bias. 8. Each of the following statements is an example of confirmation bias EXCEPT ..... A) Interpreting information to support your existing beliefs. B) Seeking information that challenges your beliefs. C) Only remembering details that uphold your beliefs. D) Ignoring information that challenges your beliefs. Show Answer Correct Answer: B) Seeking information that challenges your beliefs. 9. Which of the following best describes what a cognitive bias is? A) A rational decision that is based on research and facts. B) The belief that a person should change their opinions when new facts arise. C) The belief that we are right until someone provides information that contradicts our belief. D) An error in the way we think that can influence our decisions. Show Answer Correct Answer: D) An error in the way we think that can influence our decisions. 10. The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event A) Confirmation bias. B) Herd mentality. C) Hedonic adaption. D) Sunk cost fallacy. Show Answer Correct Answer: C) Hedonic adaption. 11. Which of the following is NOT true about Behavioral Economics? A) People are rational and make very predictable financial decisions. B) It is the intersection of psychology and economics. C) People can be emotional when it comes to financial decisions. D) People can be irrational when it comes to financial decisions. Show Answer Correct Answer: A) People are rational and make very predictable financial decisions. 12. Jose wants to go see a movie that all of his friends are raving about. Which cognitive bias is most likely affecting his decision? A) Confirmation Bias. B) FOMO (Fear of Missing Out). C) Boredom. D) Loss Aversion. Show Answer Correct Answer: B) FOMO (Fear of Missing Out). 13. The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence A) Confirmation Bias. B) Sunk Cost Fallacy. C) Overplacement. D) Loss Aversion. Show Answer Correct Answer: A) Confirmation Bias. 14. They are recovery techniques using Behavioral economics A) Loss aversion, Risk aversion, Anchoring. B) Loss aversion, Risk aversion, Kindness and empathy. C) Guidance, active listening and empathy. D) None of above. Show Answer Correct Answer: A) Loss aversion, Risk aversion, Anchoring. 15. What are social values, as they pertain to money? A) How your family, friends, and community members impact your feelings about money. B) How you, personally, care and think about finances. C) How companies and advertisement make you feel about money. D) How banks and other financial institutions treat you and your money. Show Answer Correct Answer: A) How your family, friends, and community members impact your feelings about money. 16. Effect is a psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them A) Mere familiarity. B) Availability heuristic. C) Priming. D) Regret Aversion. Show Answer Correct Answer: A) Mere familiarity. 17. Endowment Effect A) Owning things that cost more than they should. B) The tendency to put more value on things you don't own. C) The tendency to put more value on things you already own. D) Buying everything because there is always sales. Show Answer Correct Answer: C) The tendency to put more value on things you already own. 18. What is the name of the small group of economists and psychologists who questioned the existence of Penny? A) Richard Thaler and his colleagues. B) Behavioral economists. C) Psychologists. D) Economists. Show Answer Correct Answer: A) Richard Thaler and his colleagues. 19. Even though you're full, you keep eating because the meal was expensive. Example is: A) Fear of Missing Out. B) Counting carbs. C) The Sunk Cost Fallacy. D) The Endowment Effect. Show Answer Correct Answer: C) The Sunk Cost Fallacy. 20. A subconscious error in thinking that leads to irrational decision making A) Cognitive Bias. B) Sunk Costs. C) Overnight Test. D) Herd Mentality. Show Answer Correct Answer: A) Cognitive Bias. 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