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