Economics Chapter 23 1 The Most Common Form Forced Savings The

Chapter 23 Test Bank KEY

1. The most common form of “forced savings” in the U.S. is:

2. The program Save More Tomorrow (SMarT) is:

3. The Save More Tomorrow (SMarT) program found all of the following except that:

4. Status-quo bias is:

5. Status-quo bias is:

6. The SMarT program is designed to overcome which common barrier to saving?

7. The success of the SMarT program has proven that changing the way we present options can:

8. Choice architecture is the:

9. The organization of the context and process in which people make decisions is called:

10. Choice architecture can:

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11. Choice architecture focuses on such factors as:

12. A choice architect is someone who:

13. Neutral policy with respect to choice architecture is:

14. The implementation of choice architecture that alters people’s behavior in a deliberate and predictable

way without changing economic incentives much is called:

15. When considering choice architecture, a nudge:

16. When considering choice architecture, a nudge:

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17. A “bad choice” as defined in choice architecture is a choice that:

18. A mistake is a choice that:

19. All of the following are traditional economic views except:

20. By studying the effects of choice architecture, we can:

21. Behavioral economists accept that people ___________ their well-being but sometimes

________________.

22. When we study choice architecture, we recognize that people make:

23. The term time inconsistency is used to describe:

24. People’s preferences about the present are ____________ with their preferences about the future,

simply because the future choices are ____________.

25. If you intend to begin jogging one week from today, and next week tell yourself you’ll begin in another

week, your preferences are:

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26. Your roommate tells you she’s going to join the gym next week. A week and a half goes by and you

ask her how the gym is going, and she tells you she’s going to wait until the following week. Your

roommate’s preferences are:

27. Psychological research shows that choices that involve ___________ are likely to turn out worse than

28. We’re more likely to make mistakes with situations we face:

29. The average person is more likely to make a mistake choosing ___________ than what to have for

dinner due to the complex nature of the topic.

30. When it’s not clear how to translate available information into something personally meaningful, it’s:

31. Which of following is not an important category of bias in human decision making?

32. An important category of bias in human decision making is:

33. In the arena of decision making, status-quo bias means that the “â€˜default'” option:

34. In the arena of decision making, the choice that will automatically take place if the chooser fails to

make an active decision is called the:

35. When shopping online, as part of the check-out process, companies often have a box checked

automatically that states you want to receive promotional e-mails from them. The directions instruct you to

uncheck the box if you do not wish such correspondence. This practice is a good example of:

36. The endowment effect is the tendency:

37. Jim, an avid biker, broke his leg last year and will never be able to use his bike again. He was offered

$100 for it last year, but Jim refused to sell it, insisting it was worth more. A year later, he’s offered only

$75 for it, but Jim still refuses to sell it. Jim’s behavior could be explained by:

38. The concept of loss aversion is:

39. Choice architects know that whether something feels like a loss or gain often depends on how:

40. A store is choosing between advertising a credit card fee or a discount for paying cash to its

customers. People will care more about:

41. Jessica’s workplace is collecting money for a lottery pool. Each employee can choose to contribute

$50, with a 1 in 600,000 chance of winning $1 million. If Jessica chooses not to contribute to the lottery

pool, she is probably experiencing:

42. A store is choosing between advertising a credit card fee or a discount for paying cash to its

customers. More customers are likely to pay cash if the store owner advertises:

43. In terms of framing, we respond better to:

44. Commitment devices are:

45. A person committing to carpool with a friend to the gym for daily workouts is an example of:

46. A person cutting up her credit cards in an effort to curb her spending is an example of:

47. A person setting up automatic deductions through her employer so a portion of her pay goes into a

“Christmas account” is an example of:

48. Susie doesn’t buy ice cream this week at the grocery store because she intends to start a diet in a few

days. Her behavior is an example of:

49. Commitment devices can be:

50. Commitment devices can be:

51. Commitment devices:

52. The Save More Tomorrow (SMarT) program is an example of a:

53. Commitment devices are:

54. A heuristic is a:

55. Amanda is from Vermont and visiting California for the first time. At home, Amanda always goes

jogging early in the morning because it’s hottest in the early afternoon. Not knowing what to expect of the

weather in California, she decides to go jogging in the early morning during her visit. This decision is an

example of:

56. John is buying a scented candle for his girlfriend. John thinks about her flower-scented perfume,

flower-scented air spray, and flower-scented shampoo. He decides to buy her a flower-scented candle.

His behavior is:

57. An example of a heuristic is:

58. If someone asked you to predict the price of gas in a month, and you decided to just guess by adding

a few cents to the current price of gas, which you know, your answer would exhibit:

59. Cyndi says to you, “I‘m wondering if I should study abroad in France.” You studied in Germany two

years ago, and found the cost of living (not counting tuition) to be about $5,000 for a semester, so you

say, “I bet it will cost you about $5,000, not counting tuition.” Your answer demonstrates:

60. Suppose you were asked, “Can you guess the height of the tallest living man? Is it more than 8 feet?”

When people suggest an answer in the question they ask, it is a form of:

61. Suggested donations on fundraising items sent to you in the mail is an example of:

62. Disclosing information in more usable ways to decision-makers:

63. Disclosing information in more usable ways to decision-makers:

64. The CARD Act, which tells credit card holders how long it will take to pay off their debt if they only

make minimum payments, and how much they need to pay in order to pay off the debt in three years, is

an example of:

65. A default rule:

66. When people make a decision to not participate in a program unless they actively enroll for it,

program participation is:

67. Choice architects are likely to make program participation:

68. When it comes to figuring out who wants to be an organ donor, the answer depends on:

69. Knowing that most people do not care to be outliers, one way to get people to behave a certain way is

to:

70. Once people hear what the majority of individuals like them are doing, they are most likely going to

choose:

71. Informing people of social norms is likely to get:

72. If choice architects frame choices in terms of social norms people will:

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73. Suppose studies showed that only 15 percent of all teens wear their bike helmets while riding their

bikes. If policymakers wish to have more teens wear their bike helmets, they should:

74. Suppose studies showed that 12 percent of all teens choose to participate in underage drinking. If

policymakers wish to reduce the amount of underage drinking, they should:

Chapter 23 Test Bank Summary