Worksheets1.2 and 1.3 Personal Financial literacy
Total questions: 14
Worksheet time: 7mins
Behavioral economics…
Is a field of economics that studies people who make rational and objective decisions
Analyzes how different economies around the world behave over time
Tracks and examines stock market trends over a certain period of time
Combines economics and psychology to study why people behave the way they do in the real world
Cognitive bias is…
An error in the way we think that can influence our decisions
The desire to seek out information that confirms our existing beliefs
The belief that our abilities are better than they actually are
The concept of placing more value on an item when we own it
You go to a restaurant and order a big meal. Even though you’re full, you keep eating because it was expensive. This is an example of...
Mental Accounting
The Sunk Cost Fallacy
Fear of Missing Out
The Endowment Effect
Which of the following is TRUE about cognitive biases?
It is easy to recognize when cognitive biases are influencing our own decisions
There is rarely anything you can do to combat a cognitive bias’ influence
There are only a handful of cognitive biases that exist
Awareness is often the first step to overcoming the influence of a cognitive bias
Andrew wants to buy a specific model of a new car. He conducts research and finds many resources that highlight the benefits of that car model.
Which cognitive bias might be influencing Andrew’s decision making?
Confirmation Bias
Hedonic Adaptation
The Sunk Cost Fallacy
Overconfidence
Mina wants to start using an investment app that all of her friends are raving about. She hasn’t done any research on the app, but she trusts her friends’ judgment. At home, Mina’s mom points out that Mina is being influenced by FOMO and herd mentality. All of the following are things Mina can do to overcome these cognitive biases EXCEPT…
Take time to reflect and identify why she is so eager to use the app
Watch a positive video about the app, download the app, and start using it that day
Ask people outside her friend group for their opinions and perspectives
Seek out reviews that talk about the disadvantages of using the app
You have two choices:
A) Get a guaranteed $50,
B) Take a 50/50 chance to win $100 or get nothing.
Most people choose A, even though the math is the same. What bias does this show?
Overconfidence
Confirmation Bias
Loss Aversion
FOMO
You bought a T-shirt for $10. Now someone offers you $20 for it, but you refuse to sell it even though you don’t wear it. What cognitive bias is influencing you?
Endowment Effect
Herd Mentality
Sunk Cost Fallacy
Hedonic Adaptation
You bought a $15 movie ticket. Halfway through, you’re bored and want to leave, but stay because you paid for it. What’s this an example of?
FOMO
Sunk Cost Fallacy
Loss Aversion
Overconfidence
You see all your friends investing in a trendy new app, so you invest too—without researching it yourself. What bias is at play?
Overconfidence
Herd Mentality
Confirmation Bias
Loss Aversion
You decide to buy an expensive concert ticket last minute because you don’t want to miss out, even though it strains your budget. What’s this behavior an example of?
FOMO
Endowment Effect
Sunk Cost Fallacy
Hedonic Adaptation
You think a certain stock will go up, so you only read news articles that say it’s a good investment and ignore warnings. What bias is this?
Confirmation Bias
Herd Mentality
FOMO
Overconfidence
You’ve made a few lucky investments and now think you're a stock-picking expert, so you take big financial risks. Which bias are you showing?
. Endowment Effect
Hedonic Adaptation
Overconfidence
Sunk Cost Fallacy
You finally buy the expensive phone you’ve wanted. It feels great at first, but after a few weeks, it just feels normal again. What bias does this reflect?
FOMO
Hedonic Adaptation
Endowment Effect
Loss Aversion
