According to prospect theory, how do people make economic choices?

Prospect Theory Quiz

Quiz
•
Business
•
12th Grade
•
Easy
Francesca undefined
Used 1+ times
FREE Resource
10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Based on certainty effect
Based on rationality
Based on subjective value
Based on expected value
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the expected value of a lottery ticket that costs $20 with a probability of winning of 0.5% and a prize of $2000?
$20
$15
$10
$5
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is loss aversion in prospect theory?
People are more sensitive to gains than losses
People are more motivated to avoid loss than to acquire a similar gain
People are risk seeking in gains
People are consistent in their risk preferences
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the endowment effect in prospect theory?
People attribute more value to things they don't own
People attribute more value to things merely because they own them
People are indifferent to ownership
Ownership decreases subjective value
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the sunk cost fallacy?
Making decisions based on future potential gains
Continuing a behavior due to previously invested resources
Being risk seeking in all situations
Avoiding change at all costs
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is reference dependence in prospect theory?
Being indifferent to framing of situations
Ignoring all biases in decision making
Relying solely on expected value for decision making
Being influenced by context and presentation of information
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the survivorship bias?
Focusing on failures rather than successes
Concentrating on those that made it through a selection process
Ignoring prominent information
Being sensitive to variations in numbers
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