Ch. 1 P.F. Test

What is the anchoring effect?

• The tendency to rely on the first piece of information learned about something.

• The tendency to make decisions based on emotions.

• The tendency to follow the crowd.

• The tendency to overvalue long-term outcomes.

According to the text, what is an example of the anchoring effect?

• Believing a couch priced at $1,000 is a good deal if initially priced at $600.

• Following the shopping habits of friends.

• Making decisions based on group values.

• Settling for a smaller reward in the present.

What is the result of riding the wave of herd mentality?

• Making potentially harmful investment decisions.

• Making well-informed decisions.

• Avoiding biases and heuristics.

• Saving more money for retirement.

What is an example of delayed gratification mentioned in the text?

• Go to the gym or stay home?

• Study for the exam or watch TV?

• Save your money or go online shopping?

• All of the above

What was tested in Walter Mischel’s Stanford marshmallow experiment?

• The effects of immediate gratification

• The effects of delayed gratification

• The effects of financial decisions

• The effects of physical exercise

What is a common method to create a justification for our present actions, according to the text?

• Saving money

• Using "Buy Now" buttons

• Avoiding online shopping

• Comparing prices

What is the estimated amount Americans spend on self-storage units each year?

• $20 billion

• $38 billion

• $50 billion

• $100 billion

What is the effect of simulating ownership on customers, according to the text?

• They are less likely to purchase

• They are more likely to purchase

• They ignore the item

• They return the item

What is loss aversion?

• The tendency to prefer avoiding losses over acquiring equivalent gains.

• The tendency to prefer acquiring gains over avoiding losses.

• The tendency to take risks to achieve substantial gains.

• The tendency to ignore potential losses.

What is one of the main reasons people suffer from choice fatigue?

• Lack of energy to stay sharp in decision-making.

• Too few options available.

• High energy levels.

• Clear and simple choices.