Behavioral Economics & Consumer Skills

Which statement best describes how to comparison shop?

• Buy many brands of the same item, see which you like best, and return all the rest

• Set a budget, decide what features you want, and see which stores/brands best fit your needs

• Visit many stores and ask the salespeople to lower the price until one offers something you can afford

• Start your own website that compares the current store prices of items you shop for regularly

You're going to buy a new bicycle. What should be one of your first steps in comparison shopping?

• Decide what bicycle features you care most about

• Visit the store that sells the least expensive bicycles

• Locate a coupon for bicycles

• Sell your old bicycle

Randall needs to make two purchases today -- a box of donuts to share with his homeroom and a pair of running shoes for the upcoming track season. For which item should he do MORE comparison shopping?

• Neither -- both of these purchases are very easy

• The donuts -- because he wants to get a lot of flavors

• The shoes -- because they need to fit well and last for the whole season

• Both -- you should comparison shop for every item you buy

Sofia wants to buy a new pair of jeans. At Pants World, the jeans she wants cost $40 and they're having a 25% off sale. At All Clothes, the same jeans cost $38 and she has a $6 off coupon. What is the best deal?

• Purchase at Pants World, because the cost after discount will be $15

• Purchase at Pants World, because the cost after discount will be $30

• Purchase at All Clothes, because the cost after coupon will be $32

• Purchase at All Clothes, because the cost after coupon will be $34

A popular promotion at stores is "Buy One, Get One Free." Why do stores offer this deal to their customers?

• Stores promote the deal but make you pay for the second item anyway once you're at the cash register

• Stores make money because you still have to pay taxes on the second item

• Most stores are not trying to make a profit, so it doesn't matter if they give away free items

• Great deals convince customers to buy things they don't need and stay loyal to the store or bran

Which of the following best describes what a cognitive bias is?

• A rational decision that is based on research and facts

• The belief that a person should change their opinions when new facts arise

• The belief that we are right until someone provides information that contradicts our belief

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

Which of the following actions is the BEST way to counteract loss aversion when making a decision?

• Dwelling on the potential loss you may experience for several days

• Making the choice that takes on the most risk possible

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

• Polling a bunch of your friends and family to see what they would decide

A website tells you, "Only one left!" while shopping online. Which loss aversion strategy is this website using?

• Coupons

• Scarcity and urgency

• Buy now, get free shipping

• Free trials and samples

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

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

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

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

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

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…

• Overconfidence Bias

• The Fear of Missing Out (FOMO)

• Confirmation Bias

• The Endowment Effect