Behavioral Economics Quiz

Who is Penny, as described in the video?

• A fictional character who makes perfect financial decisions.

• A real person who won the Nobel Prize in Economics.

• A character from a popular TV show.

• A psychologist who studies human behavior.

What is the endowment effect?

• The habit of spending more money on things we don't need.

• The tendency to value things we already own more than things we don't.

• The practice of making decisions based on sunk costs.

• The inclination to save money rather than spend it.

What is an example of the sunk cost fallacy?

• Refusing to sell a valuable item you own.

• Walking ten minutes to save $5 on a purchase.

• Watching a bad movie to the end because you paid for it.

• Buying an expensive item with unexpected income.

What is transaction utility?

• The pleasure or pain from feeling like you got a good or bad deal.

• The value assigned to things we already own.

• The tendency to spend unexpected income on indulgent items.

• The practice of budgeting money into different categories.

What does mental accounting refer to?

• Separating money into imaginary categories in your mind.

• The tendency to value things we already own more.

• The practice of making decisions based on sunk costs.

• The pleasure or pain from feeling like you got a good or bad deal.