Behavioral Economics Batchelor

Front

Why does Naresh have some of his paycheck deposited directly into a savings account on a regular basis?

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Financial

Front

What does Ginny mean by saying, "I made a budget for myself in my personal finance class and used my values to decide how I want to use my money"?

Back

Ginny identified what is important to her and used that knowledge to decide how to use her money.

Front

What are social values, as they pertain to money?

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How your family, friends, and community members impact your feelings about money

Front

Behavioral economics

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Combines economics and psychology to study why people behave the way they do in the real world

Front

Cognitive bias is…

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

Front

Advertisers know that a thirty-three percent discount sounds like a better deal than a discount of one third. This best illustrates:

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framing.

Front

When people have the tendency to think they know more than they do

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Overconfidence

Front

Airline reservations typically decline after a highly publicized airplane crash because people overestimate the incidence of such disasters. In such instances, people’s decisions are being influenced by:

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The availability heuristic

Front

With regards to ground beef, consumers respond more positively to an ad describing it as “75 percent lean” than to one referring to its “25 percent fat” content. This is an example of:

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The framing effect

Front

Incentivization Bias is when people’s decisions are influenced by rewards or punishments, sometimes in ways that distort fairness, truth, or judgment.

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True