978-1259723223 Test Bank TBChap008 Part 4

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endowment effect.

Test Bank: I

Topic: Prospect Theory

142. People who engage in mental accounting are more likely to purchase overpriced

warranties.

143. According to behavioral economists, people tend to put too much weight on the future

when they make decisions.

144. Time inconsistency refers to the phenomenon where your present self misjudges what

your future self will do.

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Test Bank: I

Topic: Myopia and Time Inconsistency

145. Time inconsistency refers to the persistent underestimation of how long a task will

take to perform.

146. According to behavioral economists, self-control problems generally result from poor

information.

147. Precommitments must impose costs on people to be effective.

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148. Precommitments are a tool designed to overcome time inconsistency.

149. Behavioral economists avoid dealing with fairness concerns because the concept is

too subjective.

150. Dictators/proposers tend to act more self-interested when playing the dictator game

versus the ultimatum game.

151. The dictator and ultimatum games reveal that fairness and concern for others motivate

people’s behavior.

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TRUE

152. Results of the dictator and ultimatum games reveal that people act in equally self-

interested ways, regardless of the context or rules of the game.

153. Behavioral economics demonstrates that the threat of rejection makes people less

likely to engage in transactions.

154. The threat of rejection is part of what makes the invisible hand a valid metaphor for

how the market system works.

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AACSB: Knowledge Application

Accessi b i l ity: Keyboard Navigation

Blooms: Remember

Di f f i c u l t y : 01 Easy

Learning Objective: 08–05 Define fairness and give examples of how it affects behavior in

the economy and in the dictator and ultimatum games.

Test Bank: I

Topic: Fairness and Self-Interest

Multiple Choice Questions

155. Behavioral economics attempts to make better predictions about human behavior by

combining insights from the following fields, except

156. Neoclassical economics tends to make inaccurate predictions of human behavior in

situations involving

157. Scientists studying human behavior have found that people tend to

158. Behavioral economic theories are developed based on the following, except

159. Neoclassical economics does not hold which of the following assumptions?

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Learning Objective: 08–01 Define behavioral economics and explain how it contrasts with

neoclassical economics.

Test Bank: II

Topic : Systematic Errors and the Origin of Behavioral Economics

160. When people make decisions that go against their own interests, neoclassical

economics explains this to be instances where people are

161. Neoclassical economics and behavioral economics disagree on the following

assumptions, except

162. Neoclassical economic models make simplifying assumptions about people’s

rationality and preferences for the following reasons, except

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C. these assumptions allow the models to generate quite precise predictions of behavior.

D.

these assumptions allow the models to generate quite accurate predictions of behavior.

163. Behavioral economists criticize neoclassical models as being

164. Neoclassical economics assumes that people have the following characteristics,

except

165. Behavioral economics assumes that people are

166. Regarding people’s preferences, behavioral economists observe that these preferences

are

167. Behavioral economists put significant emphasis on using models to

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Di f f i c u l t y : 01 Easy

Learning Objective: 08–01 Define behavioral economics and explain how it contrasts with

neoclassical economics.

Test Bank: II

Topic : Systematic Errors and the Origin of Behavioral Economics

168. Behavioral economists believe that people can be made better off by

169. “Impulse buying” is often the result of a

170. Why do cereals marketers most prefer to have their brand occupy the shelf-space a

foot or two below a typical adult’s eye-level?

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D.

Because they are targeting the children who go shopping with adults.

171. Many economists believe that the neoclassical theories of human behavior and the

insights being accumulated in behavioral economics are basically

172. Brain scientists have found that the human brain devotes more neurons toward

processing and interpreting visual information than it does to anything else. Therefore,

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Test Bank: II

Topic : Our Efficient, Error-Prone Brains

173. “Heuristics” used by the human brain refer to the

174. “Heuristics” used by the human brain are one of the reasons why

175. Which of the following does not illustrate the use of heuristics?

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D. staying upright on a bicycle by steering in the direction of a fall when one begins to

happen

176. The “shadow heuristic” is all of the following, except

177. Because heuristics appear to be hardwired into the brain, the consequences include

the following, except that

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Learning Objective: 08-02 Discuss the evidence for the brain being modular,

computationally restricted, reliant on heuristics, and prone to various forms of cognitive

error.

Test Bank: II

Topic : Our Efficient, Error-Prone Brains

178. The fact that specific areas of the human brain deal with specific sensations and

activities like hearing, speech, and breathing is referred to as brain

180. Cognitive biases are the result of

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B.

heuristics used in the intuitive processes of the human brain.

C. deliberative processes of the human brain taking over the intuitive ones.

D. the conflict between the older part and the newer part of the human brain.

181. Most people’s natural aversion against complex mathematical problems is an example

of

182. The human tendency to believe only those data that agree with one’s preconceptions

and ignore other data that contradict the preconceptions is called

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Learning Objective: 08-02 Discuss the evidence for the brain being modular,

computationally restricted, reliant on heuristics, and prone to various forms of cognitive

error.

Test Bank: II

Topic : Our Efficient, Error-Prone Brains

183. The tendency of hard-core Republicans to believe that all of the economic

developments under the Obama presidency have been detrimental to the nation illustrates

the

184. When someone tries to “multitask” despite mounting evidence that multitasking is

actually inefficient, this illustrates

185. The persistence of some “urban legends” and some myths is a reflection of the

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A. framing effect.

B.

confirmation bias.

C. hindsight bias.

D. availability heuristic.

186. One important consequence of the confirmation bias is that

187. People’s tendency to attribute their successes to personal effort or a special personal

trait, while blaming their failures on the faults of others or on something beyond their

control is called

188. One important consequence of the self-serving bias is that

189. Wall Street bosses who believed that the huge profits of their firms prior to the

financial crisis that started in 2007 was their personal accomplishment and that the

financial crisis was due to overregulation by government illustrates the

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Difficult y : 02 Medium

Learning Objective: 08-02 Discuss the evidence for the brain being modular,

computationally restricted, reliant on heuristics, and prone to various forms of cognitive

error.

Test Bank: II

Topic : Our Efficient, Error-Prone Brains

190. Some people’s tendency to believe that they are better than average at making

judgments or opinions is called the

191. The so-called Lake Wobegon effect, where everyone in a group claims to be above

average, illustrates the

192. One major consequence of the overconfidence effect is that

193. When people retroactively believe that they had accurately foreseen past events, they

are illustrating the

194. The oft heard “I knew it all along” comment that many people make illustrates the