WorksheetsCognitive Biases and Behavioral Economics Quiz
Total questions: 20
Worksheet time: 10mins
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
Behavioral economics attempts to explain:
the behavior of demand curves.
how human psychology influences economic behavior.
why sunk costs should be ignored in decision making.
why economists behave differently from everyone else.
When people place more value on things they own because they own them, they may be demonstrating:
Ownership Bias
Endowment Effect
Herd Mentality
Confirmation Bias
Tendency to feel anxiety / fear that an exciting or interesting event may currently be happening elsewhere is:
FOMO (Fear of missing out)
Hedonic adaptation
Endowment effect
Behavioral finance
Tendency to conform to the behaviors and beliefs of the people around you
Bandwagon Effect
Sunk cost fallacy
Sunk costs
Loss aversion
Selecting a cleaner with the lable "Kills 99% of germs" over one that says "Only 1% of germs survive" may be a result of which bias?
Sunk Cost
Endowment Effect
Framing Effect
Confirmation Bias
How does behavioral economics differ from traditional economics?
It ignores human psychology
It focuses on psychological influences on economic decisions
It only studies supply and demand
It assumes all decisions are rational
What is the main reason people fall for the sunk cost fallacy?
They want to avoid losses already incurred
They want to follow the crowd
They want to confirm their beliefs
They want to own more things
Which of the following best illustrates bandwagon effect?
Buying a product because it is popular, not because you need it
Refusing to change your mind despite new evidence
Overvaluing your own possessions
Fearing you are missing out on an event
What is a common effect of the endowment effect in personal finance?
Refusing to sell assets at a fair price
Only seeking information that supports your investments
Following the crowd in investment decisions
Feeling anxious about missing out on deals
Which bias explains why we may hold on to something that is no longer valuable or that serves us just because of all the time and or money we've invested toward it?
Overconfidence bias
Buyers Remorse
Sunk Cost Fallacy
Affect Heuristic
When seeking information, if you tend to believe articles more that support your existing view of something, you may be influenced by:
Gambler's Fallacy
Framing Effect
Nostalgia Effect
Confirmation Bias
Relying on emotional responses rather than factual information to make decisions may be explained by:
Confirmation Bias
Hedonic Adaptation
Affect Heuristic
Overconfidence Bias
Which of the following is a possible strategy to overcome cognitive biases?
Ignoring all feedback
Seeking diverse perspectives
Making decisions quickly
Relying only on intuition
Why is it important to understand our mind’s shortcomings when making financial decisions?
It helps us ignore our instincts
It allows us to become better stewards of our money
It encourages us to spend more impulsively
It makes us overconfident in our choices
Which is an example of Gambler's Fallacy?
Always betting on (black/red)
Believing your string of losses will lead to a win
Considering the house edge before betting
Walking away after losing once
When you treat "found" money differently than "earned" money, what may be occuring?
Sunk Cost Fallacy
Mental Accounting
Affect Hueristic
Bandwagon Effect
Loss Aversion is a bias that explains why we hate ______ more than we love _______.
losing ; winning.
sadness ; joy
ambiguity ; clarity
Conrad ; Jeremiah
When we buy something because it makes us remember a good childhood memory, that may be:
Confirmation Bias
Nostalgia Effect
Mental Accounting
Anchoring Bias
When we spend more using a credit/debit card than with cash, we see the:
Sunk Cost Fallacy
Nostalgia Effect
Bandwagon Effect
Cashless Effect
