TEST: Unit 12 Behavioral Economics

Sarah skips a party due to other plans but later regrets it when she sees friends' posts on social media.

Emily selectively attends events aligned with her interests without worrying about others.

Jake immediately joins a spontaneous gathering to avoid missing out on a memorable experience.

Mark attends every event to avoid feeling left out, regardless of his interest.

People with lower salaries are generally happier.

Salary has no impact on happiness.

The link between salary and happiness is complicated, influenced by various factors.

Higher salaries always make people happier.

Cognitive bias is how people objectively process information.

It's the brain's tendency to make logical decisions based on evidence.

Cognitive bias involves patterns of deviation from rational judgment, impacting decision-making.

It's the mind's ability to eliminate bias in thinking and perception.

Janet lends the snowboard to a friend for an extended period to see if she misses it before deciding to sell it.

Janet decides to keep the snowboard because she's emotionally attached to it, fearing she might regret selling it.

Janet sells the snowboard without much thought, as she believes in minimizing possessions for a clutter-free life.

Janet donates the snowboard to a local charity without considering its sentimental value.

The Endowment Effect

Confirmation Bias

Overconfidence Bias

The Fear of Missing Out (FOMO)

Confirmation bias

Fear of missing out

Overconfidence

Endowment effect

Overconfidence

Sunk cost

Endowment effect

Loss aversion

There has been a notable shift toward visual content, influencer collaborations, and personalized targeting.

The focus has shifted exclusively to traditional advertising channels, sidelining social media marketing.

It has remained consistent, with no significant changes in strategies or platforms.

Social media marketing has become less influential as other advertising methods have gained popularity.

Overestimation

Overprecision

Overgeneralization

Overplacement

People always make smart decisions based on what they know.

Economic decisions are only influenced by external factors.

he market always gets prices right by incorporating all information.

People might make less-than-rational decisions due to biases and emotions.

Relevant costs

Sunk costs

Opportunity costs

Avoidable costs

Scarcity

Buy now, get free shipping

Scarcity and Urgency

Free trials and samples

The time spent attending the workshop.

The potential benefits the software promised.

The travel expenses to and from the workshop.

The registration fee you paid for the workshop.

Confirmation Bias

Loss Aversion

The Endowment Effect

Herd Mentality

Something that was made by hand rather than at a factory

Getting things for enjoyment and memorable experiences.

Something that commemorates an experience, like a souvenir

Something that has a lot of monetary value

Mason went to see a movie with his friends even though he didn't like the genre

Davona chose to skip dinner with her friends and watched a movie at home instead

Ginnifer decided to keep her current phone even though her closest friends bought the new version

Akshay bought a shirt he liked from an unpopular brand

Engage in discussions with individuals who hold varying opinions on the proposed tax increase.

Attend additional town hall meetings to gather more perspectives from different community members.

All of the above.

Read articles and analyses from diverse sources to gain a well-rounded understanding of the issue.

Chris's happiness will continually increase over time due to the Tesla.

Chris's happiness will remain unchanged after acquiring the Tesla.

Chris's happiness is likely to experience a temporary boost but will eventually return to baseline.

Chris's happiness might initially decline, but will later stabilize at a new baseline.

Emphasize future gains, downplaying the initial investment loss.

Feel both pleased with gains and concerned about losses.

Feel more upset about losing money than happy about potential gains.

Remain indifferent due to the cryptocurrency market's unpredictability.

Act impulsively to avoid missing out on activities.

Stay content and unaffected by external trends.

Ignore trends, focusing solely on personal preferences.

Easily dismiss social pressures and stick to their plans.

Indifferent to either keeping the original or trading for a similar item.

Willing to switch items, valuing the exchange opportunity.

Likely to trade, considering the value of the offered item.

Prefer to keep the original item

Succumbing to the fear of missing out on limited-time offers.

Responding to social pressure and the desire to keep up with trends.

Giving in to the influence of persuasive advertising and marketing.

Engaging in impulse buying without careful consideration.

Ignoring information that challenges your beliefs

Interpreting information to support your existing beliefs

Seeking information that challenges your beliefs

Only remembering details that uphold your beliefs

People prefer having opinions that are very different from those of others

Humans evolved to stick with the herd to survive

It can be uncomfortable standing out from the crowd

Fighting social pressure can be difficult to do

Social media ads are trying to get you to buy stuff you NEED, not want

Marketers have your best interests in mind and want you to be financially responsible

The more likes a post has, the more trustworthy and accurate the information is likely to be

People typically only post about the best parts of their lives on social media