Behavioral Economics in Policy Design
  • 1. What is the 'endowment effect' in behavioral economics?
A) The tendency of people to value something more once they own it
B) The preference for outcomes that are certain over uncertain ones
C) The belief that past outcomes were foreseeable
D) The influence of the first piece of information encountered when making decisions
  • 2. What is the 'overconfidence bias' in behavioral economics?
A) The tendency for individuals to overestimate their abilities and knowledge
B) The fear of missing out on opportunities
C) The tendency to follow the crowd without critical thinking
D) The preference for maintaining the status quo
  • 3. Which term describes the phenomenon where people are more likely to make a decision when presented with limited options?
A) Loss aversion
B) Choice overload
C) Framing effect
D) Recency bias
  • 4. What concept suggests that people assign different values to the same object depending on whether they own it or not?
A) The endowment effect
B) Anchoring effect
C) Recency bias
D) Confirmation bias
  • 5. How does 'confirmation bias' affect decision-making in behavioral economics?
A) People tend to follow social norms
B) People assign different values to the same object based on ownership
C) People are more likely to make a decision when presented with limited options
D) People seek out information that confirms their existing beliefs while ignoring contradictory evidence
  • 6. In what way can 'salience' affect decision-making in policy design?
A) By forcing people to comply with regulations without question
B) By disregarding the emotional aspects of decision-making
C) By making certain options more prominent or noticeable, influencing choices
D) By limiting the number of options available to individuals
  • 7. What does 'bounded rationality' refer to in behavioral economics?
A) The tendency to conform to social norms in decision-making
B) The idea that people's decision-making is limited by cognitive constraints and biases
C) The belief that people always make perfectly rational decisions
D) The practice of making decisions with limited information
  • 8. How does 'loss aversion' influence decision-making according to behavioral economics?
A) People are more sensitive to losses than gains of the same value
B) People make decisions based on the context in which options are presented
C) People favor choosing the default option
D) People tend to overestimate the probability of rare events
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