WorksheetsWB ch 1 Financial Attitudes and Behaviors
Total questions: 25
Worksheet time: 13mins
You see an advertisement promoting a sale “for a limited time only!” with a countdown clock. Which bias is being used?
Herd Mentality
Loss Aversion
Hedonic Adaptation
Fear of Missing Out (FOMO)
Behavioral economics is …
The study of how rational people make economic decisions
The study of how irrational factors affect individual’s economic decisions
The study of how economies around the world interact with each other
The study of how investors choose which stocks to buy and sell
Guy bought tickets to a concert but there is a bad snow storm. He decides to go anyway because he paid for it. This is
Sunk Cost Fallacy
Endowment Effect
Overconfidence
Herd Mentality
Peter can choose from two retirement accounts. Fearing a loss, he opts for the more conservative one. This is a type of
Confirmation Bias
Overconfidence
Loss Aversion
Fear of Missing Out (FOMO)
Paula sees her friends' pictures of a concert that she couldn't attend because of work. She feels like an outsider.
Paula is experiencing Fear of Missing Out (FOMO)
Paula is experiencing Herd Mentality
Paula is experiencing Loss Aversion
Paula is experiencing Confirmation Bias
Which of the following is an example of loss aversion?
Selling your house at a loss to find a better investment opportunity
Believing that your house is worth more than it is because you own it
Deciding against selling your house below what you purchased it for
Only looking at sources that reinforce a higher selling value for your home
Confirmation bias is …
The tendency to seek out information that supports our existing beliefs
The tendency to value something more because you own it
The belief that we are better at something than we actually are
The belief that we should do something because our friends are doing it
The Fear of Missing Out, or FOMO, is…
The effect of feeling a loss more than an equal gain
The anxiety that an interesting or exciting event is happening without you
Placing higher value on things you own
The opposite of YOLO (You Only Live Once)
The Endowment Effect is …
Doing something because you see all of your friends doing it
Valuing something more because you own it
Returning to a baseline level of happiness after a major event
Continuing something because you have contributed resources to it
The irrational ways that we process information & make decisions using our own perspective and incomplete information.
Cognitive biases
Hedonic Adaptation
The Endowment Effect
Overprecision
You are new to a city and find two restaurants near each other that offer a similar menu. You pick the more crowded one.
This is an example of Fear of Missing Out (FOMO)
This is an example of Herd Mentality
This is an example of Sunk Cost Fallacy
This is an example of Overvaluing
Marie's car has needed over $2000 in repairs. She resists selling it because she has spent so much money. This is...
The Endowment Effect
Confirmation Bias
Overconfidence Bias
Sunk Cost Fallacy
While researching Apple, Remy tends to focus on positive stories about their profits instead of stories about poor sales
Remy is experiencing the Endowment Effect
Remy is experiencing Overconfidence Bias
Remy is experiencing Herd Mentality
Remy is experiencing Confirmation Bias
In 2021, many people saw the value of Gamestop stock increasing sharply and purchased the stock too. These buyers were
Experiencing Herd Mentality
Experiencing Overprecision
Experiencing Confirmation Bias
Experiencing Hedonic Adaptation
Which of the following is an example of allowing sunk costs to impact your decision?
Not selling a baseball card that you think is worth more because you own it
Continuing to watch a movie that you don’t like because you paid to see it
Selling a stock because you see the price drop and want to avoid losses
Buying a new phone because you see all of your friends have that it
What does BNPL stand for?
Before Now, Pay Later
Buy Now, Pay Later
Buy Never, Pay Later
Bank Now, Pay Later
How are BNPL services primarily marketed?
As loans
As credit opportunities
As payment plans
As investment plans
What is a major concern with using BNPL services?
High interest rates
Immediate repayment
Lack of consumer protection
Credit score improvement
What does Afterpay charge if you do not pay on time?
Interest
Nothing
A fixed fee of $10
25% of the purchase price
What is a common consequence of using BNPL services irresponsibly?
Gaining interest
Earning rewards
Improving credit score
Overdrawing bank accounts
What is a major downside of BNPL services compared to credit cards?
Lack of consumer protections
Higher interest rates
Fewer repayment options
Mandatory account creation
Explain the concept of 'Pareto Efficiency' in relation to the 80/20 Principle.
Pareto Efficiency is only applicable in economic contexts
Pareto Efficiency is related to the 50/50 Principle
Pareto Efficiency implies equal distribution of resources
Pareto Efficiency in relation to the 80/20 Principle signifies an optimal allocation of resources where the maximum benefit is achieved with minimal waste.
Teaching yourself delayed gratification makes you more likely to ________ in life.
succeed
fail
Which is an example of instant gratification?
Spending all your money the same day you earn it.
Saving money for a new pair of shoes
Which shows delayed gratification?
