Which of the following is the LEAST likely to influence a person’s financial decisions?

What their family’s needs are

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…

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

Avoid social media since it will influence her decision

Allow others to make the decision because she is too biased

Join a Facebook group that organizes citizens that are opposed to the tax increase

Unlike traditional economics, behavioral economics believes that…

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

People behave in a rational way when making economic decisions

There is no way to predict how people will make economic decisions

People will always update their viewpoints based on new information

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?

The time you spent looking for cars that day

The time it will take to drive home

Herd mentality may explain why...

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

Davona chose to skip dinner with her friends and watched a movie at home instead

Ginnifer decided to keep her current phone even though her closest friends bought the new version

Ben bought a shirt he liked from an unpopular brand

Due to hedonic adaptation, what do you expect would happen to Anu's level of happiness after buying a new jacket?

It would initially increase, then return to a baseline level

It would remain at a baseline level, then increase over time

It would initially decrease, then return to a baseline level

It would remain at a baseline level, then decrease over time

People who experience FOMO may...

Go into debt to keep up with everyone else

Save a percentage of their paycheck each month

Donate money to a cause they care about

Create and stick to a monthly budget

People are compelled to buy MORE stuff for all of the following reasons EXCEPT...

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

The media portrays that the more stuff we have, the happier we will be

We tend to want more compared to those around us

Once the initial novelty of a recent purchase wears off, we look to buy the next new thing

Each of the following statements is an example of confirmation bias EXCEPT...

Seeking information that challenges your beliefs

Interpreting information to support your existing beliefs

Only remembering details that uphold your beliefs

Ignoring information that challenges your beliefs

All of the following explain why humans might "follow the herd" EXCEPT...

People prefer having opinions that are very different from those of others

It can be uncomfortable standing out from the crowd

Humans evolved to stick with the herd to survive

Fighting social pressure can be difficult to do

When using social media, it's important to remember that...

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

Social media ads are trying to get you to buy stuff you NEED, not want

Marketers have your best interests in mind and want you to be financially responsible

The more likes a post has, the more trustworthy and accurate the information is likely to be

Behavioral Finance

Authored by Orville Hasty

Business

9th - 12th Grade

Used 14+ times

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25 questions

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MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

After learning about hedonic adaptation, Tamara wants to spend her money more wisely. Which of the following might help her do so?

Purchasing a dress after seeing an ad on social media

Buying a new laptop even though her current one still works well

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

Getting a new phone accessory for her phone case

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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?

The Fear of Missing Out (FOMO)

Overconfidence

Endowment effect

Confirmation bias

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

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...

Endowment effect

Loss aversion

Sunk cost

Overconfidence

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