WorksheetsFM * Behavioral Economics-B
Total questions: 15
Worksheet time: 8mins
Strong inner values translate to trusting one’s gut or following the inner voice, which can give the person the resourcefulness to overcome a sudden money crunch.
Inner
Social
Physical
Financial
How we handle money is, in part, tied up in our unique family histories.
Inner
Social
Physical
Financial
When one does not have a strong concern about the appropriateness of their purchases, he or she might be less prepared for financial emergencies.
Inner
Social
Physical
Financial
A person with strong physical values also might prioritize getting more insurance to protect their valuables, and might spend more than others on home and self-care (e.g., gym memberships, beauty treatments, dry cleaning, interior design). This is not felt to be frivolous, but to protect his or her investment.
Inner
Social
Physical
Financial
Strong feelings of autonomy and security help us feel in charge of our lives, which can translate to more confidence in financial transactions.
Inner
Social
Physical
Financial
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
Naresh started a new job and is having some of his paycheck deposited directly into a savings account. Which of the following values BEST explains why Naresh does this on a regular basis?
Inner
Social
Physical
Financial
You overhear your friend Ginny say, "I made a budget for myself in my personal finance class and used my values to decide how I want to use my money." What does Ginny mean by this?
Ginny used the value of her bank account balance to decide how to use her money
Ginny asked her friends and family for advice to decide how to use her money
Ginny followed recommendations she saw on social media to decide how to use her money
Ginny identified what is important to her and used that knowledge to decide how to use her money
What are social values, as they pertain to money?
How you, personally, care and think about finances
How your family, friends, and community members impact your feelings about money
How companies and advertisement make you feel about money
How banks and other financial institutions treat you and your money
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
Jerome is checking his bank account and is shocked to see that his account balance is $2. He starts to get frustrated with his parents since they stopped giving him a weekly allowance due to his expensive spending habits.
Only tuning in to news and stories that confirm your opinions
Attributing other people’s success to luck
Constantly blaming others if things don’t go your way
Assuming you are always correct
Assuming that everyone else shares the same opinions or beliefs
