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