Behavioral Economics

What is the primary focus of behavioral economics?

• The study of market trends

• The analysis of consumer behavior

• The impact of government policies on the economy

• The mathematical modeling of economic systems

Which of the following is a key concept in behavioral economics?

• Rational choice theory

• Supply and demand

• Cognitive biases

• Monetary policy

Behavioral economics often challenges which traditional economic assumption?

• Perfect competition

• Rational decision-making

• Scarcity of resources

• Equilibrium pricing

What is 'loss aversion' in behavioral economics?

• The tendency to prefer gains over losses

• The tendency to prefer avoiding losses over acquiring equivalent gains

• The tendency to invest in high-risk assets

• The tendency to save rather than spend

Which experiment is commonly associated with behavioral economics?

• The Stanford prison experiment

• The ultimatum game

• The double-slit experiment

• The Milgram experiment

In behavioral economics, what does the term 'nudge' refer to?

• A financial incentive to change behavior

• A subtle policy shift to encourage better decision-making

• A direct order to change behavior

• A tax on unhealthy products

Which of the following is an example of a cognitive bias?

• Inflation

• Anchoring

• Supply shock

• Interest rate

What role does psychology play in behavioral economics?

• It provides insights into market trends

• It helps understand consumer preferences

• It explains irrational behavior in economic decisions

• It determines fiscal policy

Which of the following best describes 'bounded rationality'?

• Making decisions with unlimited information

• Making decisions with limited information and cognitive resources

• Making decisions based on emotions

• Making decisions based on peer pressure

What is the 'endowment effect' in behavioral economics?

• The tendency to value owned items more than identical items not owned

• The tendency to undervalue future earnings

• The tendency to overestimate one's own abilities

• The tendency to follow the crowd