Vocabulary
The subfield of economics that applies to psychological insights into human behavior and to explain economic decision making.
What is Behavioral Economics?
Our personal identity (how we see ourselves) and our social identity (how we believe others see us).
What are Inner Values?
The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website.
What is FOMO (fear of missing out)?
Naresh started a new job and is having some of his paycheck deposited directly into a savings account. What value is he demonstrating?
What is a Financial Value?
The tendency people have to be more confident in their own abilities
What is Overconfidence Bias?
The tendency to put more value on things you already own.
What is endowment effect?
The tangible aspects if life, the external world, our physical health and well-being.
What are Physical Values?
The tendency to conform to the behaviors and beliefs of people around you.
A small loan, offered through a business, lent at high interest rates and meant to be paid back as soon as you receive your next paycheck.
What is a payday loan?
When a person believes they are better at something than they actually are
What is Overestimation?
The tendency to regard losses as considerably more important than gains of comparable magnitude.
What is Loss Aversion?
What are Financial Values?
A subconscious error in thinking that leads to irrational decision making.
What is Cognitive Bias?
$700 Billion
What is the collective amount of credit card debt for Americans?
When a person mistakenly believes they are better than others.
What is Overplacement?
A strategy used to combat loss aversion by imagining that overnight something you own has been replaced with cash, then determining whether you would prefer to keep the case or buy the item back.
What is the Overnight Test?
Our desire for belonging and relatedness with our family members, neighbors, friends, coworkers, and communities.
The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence
What is Confirmation Bias?
The idea that we are smarter than the average person and will not be taken advantage of or scammed.
What is "the illusion of invulnerability?"
Costs that have already been incurred and cannot be recovered.
What are Sunk Costs?
The tendency to make decisions about a current situation based on what resources you have already invested in a situation.
What is the Sunk Cost Fallacy?
The influences that our different values have on how we view and handle money.
What are Effects on Money Habits?
The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event
What is Hedonic Adaptation?
Hello Wallet.
What is an example of an app that helps people with financial management.
When a person has an exaggerated certainty that an answer is correct.
What is Overprecision?