1. Which of the following statements is TRUE of Behavioral Economics? Its purpose is to replace orthodox economics b. a. It asserts that people are System 2 thinkers and decision makers It considers individuals as Econs not Humans It assumes that people make decisions in a thoughtful way considering all of the available information e. It finds that people are not rational and often irrational in their decision making Which of the following concepts help explain the way Behavioral Economics analyzes individual decision making? a. Framing b. Loss Aversion c. The \"Hot Hand\" d. Overvaluing Ownership of Property e. All of the above 2. Why is Behavioral Economics useful in learning economic behavior and analysis? It can a. yield better predictions about the effect of existing public policies b. suggest policies that \"nudge\" people into making better decisions c. offer new insights into how people actually make decisions d. explain and expand much of what microeconomics analyzes 3. e. All of the Above f, a, b, & c only Which of the following policy proposals would help people save more for retirement? a. 4. A saving program offered to employees leaving their choice of joining or not joining up to each one Putting all employees into a saving program regardless of their desire to be in the program Leaving the decision to save for the future solely up to the individual Putting all employees in a savings program with the option to opt out by signing a form None of the above b. c. d. e.
Behavioural economics incorporates the study of psychology into the analysis of the decision-making behind an economic outcome. It applies psychology in economics to find out why people sometimes make irrational decisions, and why and how their behavior does not follow the predictions of economic models.
1. Correct option is e. It finds that people are not rational and often irrational in their decision making.
2. Correct option is e. All of the above.
3. Correct option is f. a, b, & c only.
4. Correct option is d. Putting all employees in the saving program with option to opt out by signing a form.
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