This quiz works best with JavaScript enabled. Home > Finance > Economics > Behavioral Economics > Behavioral Economics – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Economics Quiz 1 (30 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) Information that solves formulas. B) Confirming every question you think. C) Only confirming what we want to believe or think thats true. D) Thinking every question we have is true. Show Answer Correct Answer: C) 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) Overprecision. C) The Endowment Effect. D) Herd Mentality. Show Answer Correct Answer: C) 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) The endowment effect. C) Herd mentality. D) Loss aversion. 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) FOMO (Fear of Missing Out). B) Confirmation Bias. C) Loss Aversion. D) Boredom. Show Answer Correct Answer: A) 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) Regret Aversion. B) Priming. C) Mere familiarity. D) Availability heuristic. Show Answer Correct Answer: C) Mere familiarity. 17. Endowment Effect A) Owning things that cost more than they should. B) The tendency to put more value on things you already own. C) The tendency to put more value on things you don't own. D) Buying everything because there is always sales. Show Answer Correct Answer: B) 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) Herd Mentality. C) Overnight Test. D) Sunk Costs. Show Answer Correct Answer: A) Cognitive Bias. 21. What life value reflects the following statement?-Think more about the sustainability of their money and generally have more in reserve.-Tend to be prepared for financial emergencies. A) Financial. B) Social. C) Physical. D) Inner. Show Answer Correct Answer: A) Financial. 22. Being worried about missing out on a party that all of your friends are going to. A) Sunk cost. B) Fear of missing out. C) Loss aversion. D) Confirmation bias. Show Answer Correct Answer: B) Fear of missing out. 23. A phenomenon whereby exposure to one stimulus influences a response to a subsequent stimulus, without conscious guidance or intention A) Priming. B) Confirmation bias. C) Herd mentality. D) Hedonic adaption. Show Answer Correct Answer: A) Priming. 24. Which of the following least describes 'Rationality' as part of the traditional economic viewpoint of consumer behaviour: A) Consumers are motivated by self-interest. B) Consumers carefully weigh up expected costs and benefits of each and every decision. C) Consumers aim to minimise their utility. D) Consumers are never instinctive or emotional when making decisions. Show Answer Correct Answer: C) Consumers aim to minimise their utility. 25. The tendency to conform to the behaviors and beliefs of the people around you A) FOMO (Fear of Missing Out). B) Herd Mentality. C) Group Think. D) Going along. Show Answer Correct Answer: B) Herd Mentality. 26. You spend an entire Saturday going to car dealerships in search of a used car. You spend hours looking at cars and even test drive a few, but there are none you like that fit your budget. What is the sunk cost you should ignore when deciding whether or not to buy a car that day? A) The cost of the car. B) The time you spent looking for cars that day. C) The time it will take to drive home. D) The cost of the warranty. Show Answer Correct Answer: B) The time you spent looking for cars that day. 27. Unlike traditional economics, behavioral economics believes that A) People will always update their viewpoints based on new information. B) People do not always behave in a rational way when making economic decisions. C) There is no way to predict how people will make economic decisions. D) People behave in a rational way when making economic decisions. Show Answer Correct Answer: B) People do not always behave in a rational way when making economic decisions. 28. The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website A) Confirmation bias. B) Overconfidence Bias. C) Herd mentality. D) Fear of Missing Out. Show Answer Correct Answer: D) Fear of Missing Out. 29. Which of the following is the LEAST likely to influence a person's financial decisions? A) What their family's needs are. B) What their friends want. C) What their values are. D) What their budget is. Show Answer Correct Answer: B) What their friends want. 30. The availability of substitutes increases the sensitivity of the original item to higher prices A) Price range. B) Link to complementary commodity. C) Availability of substitute. D) Income level. Show Answer Correct Answer: C) Availability of substitute. Next →Related QuizzesEconomics QuizzesFinance QuizzesBehavioral Economics Quiz 2Behavioral Economics Quiz 3Behavioral Economics Quiz 4Behavioral Economics Quiz 5Behavioral Economics Quiz 6Behavioral Economics Quiz 7Behavioral Economics Quiz 8Behavioral Economics Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books