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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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
