Chapter 8 Discussion Questions 3 & 5; Review Questions 1 – 3
Ch 8 DQ 3
Question-Economist Gerd Gigerenzer characterizes heuristics as “fast and frugal” ways of reaching decisions. Are there any costs to heuristics being “fast and frugal”? Explain and give an example of how a fast and frugal method for doing something in everyday life comes at some costs in terms of other attributes forgone
Answer-
Ch 8 DQ 5
Question– For each of the following cognitive biases, provide at least one example from your own life. LO8.2
a. Confirmation bias
b. Self-serving bias
c. The overconfidence effect
d. Hindsight bias
e. The availability heuristic
f. The planning fallacy
g. Framing effects
Answer–
Ch 8 RQ 1
Question-Which of the following are systematic errors? LO8.1
a. A colorblind person repeatedly runs red lights.
b. An accountant makes occasional math errors that are sometimes on the high side and sometimes on the low side.
c. Many people see faces in clouds.
d. Miranda pays good money for a nice-looking apple that turns out to be rotten inside.
e. Elvis always wants to save more but then spends his whole paycheck, month after month.
Answer-
CH 8 RQ 2
Question-Identify each statement as being associated with neoclassical economics or behavioral economics. LO8.1
a. People are eager and accurate calculators.
b. People are often selfless and generous.
c. People have no trouble resisting temptation.
d. People place insufficient weight on future events and outcomes.
e. People treat others well only if doing so will get them something they want.
Answer-
CH 8 RQ 3
Question-Label each of the following behaviors with the correct bias or heuristic. LO8.3
a. Your uncle says that he knew all along that the stock market was going to crash in 2008.
b. When Fred does well at work, he credits his intelligence. When anything goes wrong, he blames his secretary.
c. Ellen thinks that being struck dead by lightning is much more likely than dying from an accidental fall at home.
d. The sales of a TV that is priced at $999 rise after another very similar TV priced at $1,300 is placed next to it at the store.
e. The sales of a brand of toothpaste rise after new TV commercials announce that the brand “is preferred by 4 out of 5 dentists.”
Answer-
