question

When people make decisions that go against their own interests, neoclassical economics explains this to be instances where people are:

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Ignorant of what their best interests are

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Behavioral economists criticize neoclassical models as being:

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Precise but inaccurate

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Neoclassical economics assumes that people have the following characteristics, except:

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They care deeply about fairness and are often generous

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Behavioral economists put significant emphasis on using models to:

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Predict decisions and also to understand how those decisions are made

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"Heuristics" used by the human brain are one of the reasons why:

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Human perception is susceptible to context and prone to error

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One important consequence of the confirmation bias is that:

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Someone could persist in pursuing a failed policy despite overwhelming evidence of the failure

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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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Self-serving bias

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Some people's tendency to believe that they are better than average at making judgments or opinions is called the:

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Overconfidence effect

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The so-called "Lake Wobegon effect", where everyone in a group claim to be above average, illustrates the:

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Overconfidence effect

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The oft-heard "I-knew-it-all-along" comment that many people make illustrates the:

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Hindsight bias

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One major consequence of the overconfidence effect is that:

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Some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments

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When people believe murder is a more common cause of death than stomach cancer is, it illustrates the:

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Availability heuristic

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When ordinarily-neat people tend to litter in areas that are covered with graffiti, they illustrate the:

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Framing effect

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When economists talk about a "new normal" in terms of conditions in the production and employment sectors, they are suggesting a change in people's perceptions influenced by the:

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Framing effect

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One of the important contributions of behavioral economics is the focus on how people make decisions involving:

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Good things and bad things

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Behavioral economists have discovered the following things about people's reaction to losses:

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People experience increasing marginal disutility from losses

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Which of the following facts is not a basis for prospect theory in behavioral economics?

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People do not experience diminishing marginal utility for gains

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Prospect theory is based on behavioral economists understanding of how people:

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React to good things (or gains) and bad (or losses)

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The following statements about behavioral economics are true, except:

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It assumes that people are always rational, deliberate, and objective in their choices

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The "anchoring" phenomenon observed by behavioral economists refers to the fact that people's estimates of the value of things are affected by:

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Recently considered information

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Economist John List has shown that the so-called "endowment effect" tends to be lower among people who often:

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Buy things for resale

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People's tendency to prefer the "default" option over other options is known in prospect theory as the:

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Status quo bias

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Behavioral economists have found that one major explanation for the inter-country differences in participation rates in organ-donation programs is the:

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Status quo bias

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Behavioral economists suggest that brand-loyalty, which can be a source of monopoly power for the producer, may be explained by consumers' tendency to have the:

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Status quo bias

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According to behavioral economics, one major cause of self-control problems (such as strictly following through on "new year's resolutions") is:

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Time inconsistency

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Neoclassical economic analysis tends to disregard the following motivations in people's decisions and actions, except:

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Self-interest

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The fact many people give to charity, and the fact that most people obey the law regardless of whether someone's watching or not, are field evidence for:

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Fairness

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Neoclassical economics assumes the following as major motivators of decisions and actions, except:

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Sense of fairness

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The "dictator game" and "ultimatum game" are experiments that have provided field evidence for:

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Fairness

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Key features of so-called "nudges" include the following, except:

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They involve significant monetary incentives

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