Unit 1: Behavioral Economics

Front

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? Options: Inner, Social, Physical, Financial

Back

Financial

Front

What does Ginny mean by saying, "I made a budget for myself in my personal finance class and used my values to decide how I want to use my money."?

Back

Ginny identified what is important to her and used that knowledge to decide how to use her money.

Front

What are social values, as they pertain to money?

Back

How your family, friends, and community members impact your feelings about money

Front

Behavioral economics…

Back

Combines economics and psychology to study why people behave the way they do in the real world

Front

Cognitive Bias is...

Back

An error in the way we think that can influence our decisions.

Front

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...

Back

The Sunk Cost Fallacy

Front

Which of the following is TRUE about cognitive biases? Options: 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

Back

Awareness is often the first step to overcoming the influence of a cognitive bias

Front

Which cognitive bias might be influencing Andrew’s decision making when he conducts research and finds many resources that highlight the benefits of a specific car model?

Back

Confirmation Bias

Front

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…

Back

Watch a positive video about the app, download the app, and start using it that day

Front

How do behavioral economists view people differently than traditional economists?

Back

Behavioral economists acknowledge that people make predictable mistakes.