Worksheets4.1.2.3 Aspects of behavioural economic theory NOTES
Total questions: 10
Worksheet time: 5mins
What does traditional economics assume about decision-making?
Decisions are influenced by social norms
Decisions are based on rational thinking with perfect information
Decisions are unpredictable
Decisions are primarily emotional
Which of the following is a focus of behavioral economics?
Focusing only on monetary outcomes
Cognitive biases like overconfidence and loss aversion
Assuming perfect market operations
Ignoring psychological factors
What does 'bounded rationality' suggest about human decision-making?
Humans face constraints like limited information and time
Humans are capable of processing unlimited information
Humans do not use heuristics in decision-making
Humans always make optimal decisions
Which example illustrates 'bounded rationality' in real life?
A job seeker waits indefinitely for a perfect job offer
An investor analyzes all potential investment opportunities deeply
A buyer exhaustively compares every car model available
A shopper purchases familiar items due to routine
What does 'bounded self-control' refer to in behavioral economics?
Always making rational decisions
Never facing temptation
The inability to control impulses and desires at times
Complete control over impulses
Which is an example of a rule of thumb in decision-making?
Invest only in what you know
Ignore expert advice
Always buy the cheapest product
Measure twice, cut once
What does the anchoring bias refer to?
Relying too heavily on the last piece of information received
Always making decisions based on logical reasoning
Ignoring initial information when making decisions
Relying too heavily on the first piece of information received
How can social norms influence purchasing decisions?
They encourage individualistic choices
They reduce the influence of marketing
They lead to decisions based on personal preference alone
They can pressure individuals to conform to trends
What role does altruism play in economic decision-making?
It leads to purely self-interested decisions
It involves sacrificing personal interests for the benefit of others
It is irrelevant in economic contexts
It promotes unfair practices
Which scenario is an example of the impact of perceptions of fairness?
Consumers always choosing the cheapest products
A company choosing to pay a living wage
Individuals never donating to charity
A company paying below the minimum wage
