Cognitive Biases Quiz

What is Confirmation Bias?

• The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence

• The tendency to put more value on things you already own

• The tendency to feel anxiety/fear that an exciting or interesting event may currently be happening elsewhere

• The tendency to conform to the behaviors and beliefs of the people around you

Which term describes the tendency to put more value on things you already own?

• Confirmation Bias

• Endowment Effect

• FOMO (Fear of Missing Out)

• Loss Aversion

Blake's friends are all going to a music concert, and Blake feels anxious about missing out. Which term best describes this feeling?

• Confirmation Bias

• Endowment Effect

• FOMO (Fear of Missing Out)

• Hedonic Adaptation

What is Hedonic Adaptation?

• The tendency to return to a baseline level of happiness regardless of whether you go through a positive or negative experience or event

• The tendency to conform to the behaviors and beliefs of the people around you

• The tendency to regard losses as considerably more important than gains of comparable magnitude

• The tendency to search for information that supports our preconceptions and to ignore or distort contradictory evidence

Naomi is considering taking a gap year after high school, but she is doubting her decision because most people from her high school plan to go to a 4-year university. Which term best describes this behavior?

• Confirmation Bias

• Endowment Effect

• FOMO (Fear of Missing Out)

• Herd Mentality

Which term describes the tendency to regard losses as considerably more important than gains of comparable magnitude?

• Confirmation Bias

• Endowment Effect

• FOMO (Fear of Missing Out)

• Loss Aversion

What is the definition of overconfidence?

• The tendency people have to be more confident in their own abilities

• The tendency to make decisions about a current situation based on what resources you have already invested in the situation

• The tendency to underestimate risks in financial decisions

• The tendency to rely on others' opinions for decision making

Which scenario best illustrates the concept of overconfidence?

• Riley is learning about investing in their personal finance class. After learning the basics of stocks and bonds, they feel confident they can pick winning stocks and want to invest half of their savings in stocks they select.

• Grace and her friends have had a long week and have decided to treat themselves to an expensive meal. Unfortunately the food isn’t very good but Grace feels like she needs to finish her meal because she already paid for it.

• John decides to buy a lottery ticket every week because he believes he is due for a win.

• Sarah always asks her friends for advice before making any major decisions.

What is the definition of the sunk cost fallacy?

• The tendency people have to be more confident in their own abilities

• The tendency to make decisions about a current situation based on what resources you have already invested in the situation

• The tendency to underestimate risks in financial decisions

• The tendency to rely on others' opinions for decision making

Which scenario best illustrates the concept of the sunk cost fallacy?

• Riley is learning about investing in their personal finance class. After learning the basics of stocks and bonds, they feel confident they can pick winning stocks and want to invest half of their savings in stocks they select.

• Grace and her friends have had a long week and have decided to treat themselves to an expensive meal. Unfortunately the food isn’t very good but Grace feels like she needs to finish her meal because she already paid for it.

• John decides to buy a lottery ticket every week because he believes he is due for a win.

• Sarah always asks her friends for advice before making any major decisions.