Behavioral Basics
What is the name of the study of how people sometimes make choices that are not perfectly rational?
behavioral economics
This bias makes people dislike losing more than they enjoy winning.
Loss Aversion
Stores put items on sale with “LIMIT 3 per customer” to encourage what?
Scarcity Effect
This bias makes you value things you own more than identical things you don’t—like keeping a rare Pokémon card even though you could sell it for $3,000.
Endowment Effect
What is the name of the study of how people use money and resoures?
economics
Sunk Cost Fallacy
Supermarkets place candy near the checkout because they want you to make this kind of purchase.
Impulse Buy
You stay and finish a movie you’re hating just because you paid to rent it and don’t want to waste the cost.
Sunk Cost Fallacy
What is it called when a person guesses instead of thinking deeply about a topic or issue?
shortcut
People copy what everyone else is doing, even if it is not smart.
Herd Mentality
Apps often send notifications like “3 people just booked this hotel!” to trigger this bias.
FOMO - Fear Of Missing Out
You walk across the street to save $5 on a cheap pair of headphones, but not for a laptop—even though it’s the same price difference. That feeling of saving is called this.
Transition Utility
Traditional economics says people make choices using logic. What else might people use instead?
feelings or emotions
Thinking "I knew it all along" after something happens.
Hindsight bias
“Buy one, get one free” plays on this bias where people overvalue getting something for “free.”
zero price effect
You treat unexpected money—like lottery winnings or a tax refund—as different from your usual budget and spend it more freely. That mental trick is called this.
mental accounting
Economists often assume people always make the best choices, but behavioral economics says people sometimes make mistakes because of .....
emotions, bad habits, or outside influences
Liking what you already own more than something new, even if it's the same value.
Endowment Effect
An online store offers a "buy now, pay later" option. Why might people choose this, even if it means more debt later?
Because people prefer rewards now and delay the pain (present bias / short-term thinking)
After prices drop—like gas going from $4 to $3.60 per gallon—some people keep buying premium gas even though the extra money should be spent or saved elsewhere. This behavior shows you’re ignoring this rule that all money is the same.
money fungibility