Exam 8: Behavioral Economics

Wall Street bosses who believed that the huge profits of their firms prior to the financial crisis that started in 2007 was their personal accomplishment and that the financial crisis was due to overregulation by government illustrates the

The dictator game and ultimatum game are experiments that have provided field evidence for

Behavioral economists believe that people

Because heuristics appear to be hardwired into the brain, the consequences include the following, except that

Natural disasters often cause shortages of critical supplies. What outcomes would neoclassical and behavioral economics typically predict from these events?

Many households in sunny cities are unwilling to invest in solar panels even though the investment would prove to be profitable in the future. What is the term for this problem? Explain.

Susie knows that too many sugary treats, while delicious when eaten, have long-term adverse effects on weight and health. Based on this information, a behavioral economist would expect Susie to

According to behavioral economics, the difficulty among many people to sufficiently save for their retirement is partly explained by

Credit card companies put a low "minimum required payment" on people's bills in the hope that people will send in low payments, thereby allowing the card companies to earn more interest. The companies are trying to exploit the

The oft heard comment, "I knew it all along," illustrates the

"Heuristics" used by the human brain refer to the

Suppose Faith and Mickey are playing both dictator and ultimatum games. Faith is the dictator/proposer and has $400 to allocate. Based on repeated experiments of the dictator and ultimatum games, what payouts to Faith would be most consistent with the findings of behavioral economists?

The dictator and ultimatum games reveal that fairness and concern for others motivate people's behavior.

Behavioral economists believe that the human brain is generally

Provide an explanation from behavioral economics for why people tend to buy overpriced warranties for large consumer purchases such as a large-screen TVs.

Dictators/proposers tend to act more self-interested when playing the dictator game versus the ultimatum game.

Riley has a new tennis racket for which she paid $75. Haley would like to buy the racket from Riley. Assuming Riley's decision is only influenced by the endowment effect, which of the following amounts would most likely represent how much Riley would have to receive to be willing to sell the racket?

When people base their estimates of the likelihood of an event on how often they've heard of such an event, they illustrate the

Regarding people's preferences, behavioral economists observe that these preferences are

Why do cereals marketers most prefer to have their brand occupy the shelf-space a foot or two below a typical adult's eye-level?