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Microeconomics Study Set 46

Business

Quiz 18 :

Behavioral and Experimental Economics

Quiz 18 :

Behavioral and Experimental Economics

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Which of the following is an example of the systematic bias of being overconfident?
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A

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A consumer who is time-consistent:
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C

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In an experiment, subjects predicted they scored 100% on a spelling test. The actual average score was 80%. These findings reflect the behavioral bias of:
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D

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Which of the following defines or describes sunk cost fallacy?
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Suppose firms altered prices to different consumers to examine price sensitivity. This would be an example of a ____ experiment.
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Which of the following statements is (are) TRUE? I. The outcomes of experiments are not affected by culture, a major strength of experiments. II. Because American and European cultures are similar, experimental findings from the two locations are similar. III. There are large differences in experimental findings between Western and non-Western cultures.
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The idea that people are altruistic:
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Alumni donations to universities and colleges may at first appear _____, but further examination reveals that they are motivated by _____.
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Behavioral economics:
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Loss aversion is a:
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Paula saves every dollar that she earns working overtime for her retirement. This week, she has added $80 to her retirement account by working overtime. On her way home from work on Friday, Paula wins $80 in a radio contest and drives to an electronics retailer to buy an $80 computer game. Paula is displaying:
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(Figure: Market for Baseball Cards) The graph shows the demand and supply curves for David Ortiz's rookie baseball card. If baseball card collectors, who are loss-averse, originally paid $6 for Ortiz's card, the current market for Ortiz's card will be characterized by: img
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Peter said, "It's time to bring our troops home from Afghanistan." Ava responded, "We need to keep our troops in Afghanistan or the deaths of all the soldiers who lost their lives fighting will be wasted." What behavior economics bias was Ava committing?
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Outlet stores frequently advertise huge discounts off base prices. Although nobody actually pays the base price, the large discount may convince consumers that they are getting a good deal. The outlet stores are using the high base prices as a form of:
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In a study to examine altruistic behavior, an economics professor recruits college students to participate in a game. The game consists of teams of two, with one person acting as the proposer and the other, the responder. The proposer receives a sum of money and must decide how to split the money with the responder. If the responder approves of how the money was split, each person receives the determined amount. If the responder rejects the split, neither player receives any money. This study is an example of a:
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Which of the following defines or describes mental accounting?
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Between 1974 and 1982, the famous RAND health insurance study randomly assigned almost 8,000 people to various health insurance plans. To examine how insurance affects the demand for medical care, some of the insurance plans had little out-of-pocket expenses, while others had significant copays and deductibles. This insurance study is an example of a:
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Consider a game in which each of three men is given $20. All three must secretly decide whether they will contribute any part of their $20 to a trust fund. At the end of the game, each player will receive 40% of the total money contributed to the trust fund, in addition to any of the remaining $20 that he is holding. If all three players contribute $20 to the trust fund, each player will earn $_____ at the end of the game.
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In competitive markets, people who have systemic biases are likely to:
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Carl's spending decisions are not affected by the source of his money. In this case, Carl is:
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