Show:
Mystery 2
Hedonic adaptation
Cognitive Bias 1
cognitive Bias 2
Mystery
100
  1. A website tells you, "Only one left!" while shopping online. Which loss aversion strategy is this website using?
  1. Coupons
  2. Scarcity and urgency
  3. Buy now, get free shipping
  4. Free trials and samples
  • Scarcity and urgency
100
  1. All of the following explain why humans might "follow the herd" EXCEPT...
  1. People prefer having opinions that are very different from those of others
  2. It can be uncomfortable standing out from the crowd
  3. Humans evolved to stick with the herd to survive
  4. Fighting social pressure can be difficult to do
  1. People prefer having opinions that are very different from those of others
100
  1. Which of the following best describes what a cognitive bias is?
  1. A rational decision that is based on research and facts
  2. The belief that a person should change their opinions when new facts arise
  3. The belief that we are right until someone provides information that contradicts our belief
  4. An error in the way we think that can influence our decisions

An error in the way we think that can influence our decisions

100
  1. You spend an entire Saturday going to car dealerships in search of a used car. You spend hours looking at cars and even test drive a few, but there are none you like that fit your budget. What is the sunk cost you should ignore when deciding whether or not to buy a car that day?
  1. The cost of the car
  2. The cost of the warranty
  3. The time it will take to drive home
  4. The time you spent looking for cars that day
  • The time you spent looking for cars that day
100
  1. Unlike traditional economics, behavioral economics believes that…
  1. People behave in a rational way when making economic decisions
  2. People do not always behave in a rational way when making economic decisions
  3. There is no way to predict how people will make economic decisions
  4. People will always update their viewpoints based on new information

People do not always behave in a rational way when making economic decisions

200

  1. Which of the following scenarios BEST demonstrates FOMO (Fear of Missing Out)?

    1. Megan takes a baking class after seeing a sign for the class at her favorite bakery

    2. David goes on a vacation to Europe and posts about it on social media every day

    3. Angela sees an advertisement for a pair of shoes and decides to buy them

    4. José wants to go see a movie that all of his friends have seen and are raving about

José wants to go see a movie that all of his friends have seen and are raving about

200
  1. After learning about hedonic adaptation, Tamara wants to spend her money more wisely. Which of the following might help her do so?  
  1. Purchasing a dress after seeing an ad on social media
  2. Buying a new laptop even though her current one still works well
  3. Donating money to a charity that supports a cause she cares about
  4. Getting a new phone accessory for her phone case

Donating money to a charity that supports a cause she cares about

200
  1. Which of the following actions is the BEST way to counteract loss aversion when making a decision?
  1. Dwelling on the potential loss you may experience for several days
  2. Making the choice that takes on the most risk possible
  3. Reframing the decision to focus on the potential gains instead of the potential losses
  4. Polling a bunch of your friends and family to see what they would decide

Reframing the decision to focus on the potential gains instead of the potential losses

200
  1. Imagine two scenarios:
  • Scenario 1: You see a rare sports card being sold for $500 in a store but choose not to buy it because you think it’s too expensive.
  • Scenario 2: You find a rare sports card worth $500 in your parents’ attic. Rather than sell it, you choose to put it in a case and display it in your room.

In scenario 1, you are putting more value on your $500 than the card. In scenario 2, you are putting more value on your card than the $500. This is an example of what?

  1. The Fear of Missing Out (FOMO)
  2. Overconfidence
  3. Endowment effect
  4. Confirmation bias

Endowment effect

200
  1. Which of the following is the LEAST likely to influence a person’s financial decisions?
  1. What their values are
  2. What their family’s needs are
  3. What their budget is  
  4. What their friends want  

What their friends want

300
  1. Michael observed he felt the pain of losing a $20 bill more than he felt the joy of finding it on the sidewalk the week before. This is a result of...
  1. Endowment effect
  2. Loss aversion
  3. Sunk cost
  4. Overconfidence

Loss aversion

300
  1. When using social media, it's important to remember that...
  1. Social media ads are trying to get you to buy stuff you NEED, not want
  2. Marketers have your best interests in mind and want you to be financially responsible
  3. People typically only post about the best parts of their lives on social media
  4. The more likes a post has, the more trustworthy and accurate the information is likely to be

People typically only post about the best parts of their lives on social media

300
  1. Sebastian began day trading stocks at the beginning of the summer.  After a month, he made a profit of $200. Due to his short term success and his belief that he is a highly skilled trader, Sebastian puts his entire savings into the market.  This is an example of…
  1. Overconfidence Bias
  2. The Fear of Missing Out (FOMO)
  3. Confirmation Bias
  4. The Endowment Effect

Overconfidence Bias

300
  1. Imani attends a town hall meeting where a tax increase is proposed to help pay for a new bridge.  After the meeting, she reads Facebook comments that complain about the already high taxes in her town, which is a view that she agrees with.  To avoid confirmation bias, Imani should…
  1. Avoid social media since it will influence her decision
  2. Seek out comments that support the tax increase and the bridge project to provide an alternative viewpoint
  3. Allow others to make the decision because she is too biased
  4. Join a Facebook group that organizes citizens that are opposed to the tax increase

Seek out comments that support the tax increase and the bridge project to provide an alternative viewpoint

300
  1. Investments of time, effort, and money that cannot be recovered are...
  1. Opportunity costs
  2. Sunk costs
  3. Relevant costs
  4. Avoidable costs
  • Sunk costs
400
  1. Overconfidence bias may lead the majority of Americans to think that they are…
  1. Above average drivers
  2. Average drivers  
  3. Below average drivers 
  4. Extremely poor drivers

Above average drivers

400
  1. People are compelled to buy MORE stuff for all of the following reasons EXCEPT...
  1. The media portrays that the more stuff we have, the happier we will be
  2. We tend to want more compared to those around us
  3. Scientific research proves that the more items we own, the happier we tend to be
  4. Once the initial novelty of a recent purchase wears off, we look to buy the next new thing

Scientific research proves that the more items we own, the happier we tend to be

400
  1. You are doing research on a new electric car that you are interested in buying.  You only visit the car company’s website and an online message board of electric car enthusiasts to do your research.  This strategy may lead to …
  1. Herd mentality
  2. The endowment effect
  3. Confirmation bias
  4. Loss aversion
  • Confirmation bias
400
  1. You buy a stock that has a price of $50 per share. A week later the stock's price drops to $25 per share (it's lost half its value). If you are affected by loss aversion you would be likely to…
  1. Buy more shares
  2. Sell the shares
  3. Do nothing
  4. Look for other stocks to buy
  • Sell the shares
400
  1. Herd mentality may explain why...
  1. Davona chose to skip dinner with her friends and watched a movie at home instead
  2. Mason went to see a movie with his friends even though he didn't like the genre
  3. Ginnifer decided to keep her current phone even though her closest friends bought the new version
  4. Ben bought a shirt he liked from an unpopular brand

Mason went to see a movie with his friends even though he didn't like the genre

500
  1. People who experience FOMO may...
  1. Save a percentage of their paycheck each month
  2. Donate money to a cause they care about
  3. Go into debt to keep up with everyone else
  4. Create and stick to a monthly budget

Go into debt to keep up with everyone else

500
  1. Due to hedonic adaptation, what do you expect would happen to Anu's level of happiness after buying a new jacket?
  1. It would initially increase, then return to a baseline level
  2. It would remain at a baseline level, then increase over time
  3. It would initially decrease, then return to a baseline level
  4. It would remain at a baseline level, then decrease over time

It would initially increase, then return to a baseline level

500
  1. Your friend gives you an item. A day later, they offer to trade you another item of similar value. According to the endowment effect, most people would keep the item…
  1. They received first
  2. They were offered second
  3. They could sell for the most
  4. They think looks the best
  • They received first
500
  1. Each of the following statements is an example of confirmation bias EXCEPT...
  1. Interpreting information to support your existing beliefs
  2. Seeking information that challenges your beliefs
  3. Only remembering details that uphold your beliefs
  4. Ignoring information that challenges your beliefs
  • Seeking information that challenges your beliefs
500
  1. Which of the following is an example of how someone’s PHYSICAL values can influence their financial decisions?
  1. Sophie likes to shop for clothes at the thrift store so that she can find good deals and save money
  2. Ben puts 20% of his take home pay into a savings account, because that’s what his mom does
  3. Jessie gets a massage every month as a form of self-care
  4. Anirudh has two job offers and decides to go with the one that will offer him more job satisfaction even though it pays less than the other job

Jessie gets a massage every month as a form of self-care