4.1.2.3 Behavioural Economics & Biases VIDEO

What does behavioral economics suggest about consumer decision-making?

• Consumers always make rational decisions.

• Decisions are only influenced by economic factors.

• Emotional and psychological factors can influence decisions.

• Consumers are not affected by social norms.

What is an example of price anchoring in retail?

• Cost-plus pricing strategy.

• Pricing based on competitor's prices.

• Comparison of prices to a recommended retail price.

• Discount offers on new products.

How does social norm influence tipping behavior?

• Social norms dictate tipping in restaurants but not at private parties.

• Tipping is consistent across all dining experiences.

• Tipping is based solely on the quality of food.

• People tip more at high-end restaurants.

What does the availability bias explain in decision-making?

• Decisions are based on the most available information.

• People assess risks based on how easily examples come to mind.

• All decisions are made after thorough risk assessment.

• Availability of information has no impact on decisions.

How might societal norms influence personal behavior?

• They have no influence on personal decisions.

• They dictate behaviors like tipping in specific social settings.

• They encourage consistent behavior in all contexts.

• Societal norms are only relevant in professional settings.

What does the availability bias potentially cause people to overestimate?

• The effectiveness of their decisions.

• Their ability to influence outcomes.

• The frequency of common events.

• The likelihood of rare events based on memorable occurrences.

How does framing influence consumer behavior?

• It has no significant impact on decisions.

• Only price framing affects consumer decisions.

• Consumers are less likely to buy products labeled as 'low fat'.

• The presentation of information can alter decision-making.

What is loss aversion in behavioral economics?

• Preference for avoiding losses over acquiring equivalent gains.

• Losses are irrelevant in economic decision-making.

• Ignoring potential losses when making decisions.

• Focusing only on potential gains in investments.

What behavior is described by the endowment effect?

• Valuing potential gains more than what one already owns.

• Undervaluing one's possessions compared to others' items.

• Overvaluing one's own possessions when considering a trade.

• Trading items frequently to maximize gains.

In what way does framing affect perceptions of product healthiness?

• Products labeled as 'low fat' are seen as less healthy.

• Framing has an effect only when products are unfamiliar.

• No impact on perception, only on price.

• Positive framing like 'low fat' can make products seem healthier.