BEHAVIORAL ECONOMICS EXAM 2025/2026
WITH 100% ACCURATE ANSWERS
1. What term describes the phenomenon where individuals believe they
possess greater abilities than they truly do?
Confirmation bias
Underestimation
Overestimation
Anchoring effect
2. If a consumer is struggling with loss aversion regarding a new smartphone
they own, how might they effectively use the Overnight Test?
By consulting friends about their opinions on the smartphone.
By immediately selling the smartphone for cash.
By imagining the smartphone has been replaced with cash and
deciding which they prefer.
By comparing the smartphone's features with competitors.
3. Behavioral economics attempts to explain:
why sunk costs should be ignored in decision making.
why economists behave differently from everyone else.
the behavior of demand curves.
how human psychology influences economic behavior.
4. If a consumer is experiencing the endowment effect, how might this impact
,their decision to sell a used car?
, They will compare the car's value to new models and sell it
immediately.
They will likely sell the car quickly at a low price.
They may overvalue the car and be unwilling to sell it for a fair
market price.
They will seek advice from friends before making a decision.
5. How does confirmation bias affect economic decision-making according to
behavioral economics?
Confirmation bias leads individuals to favor information that aligns
with their existing beliefs, potentially resulting in poor economic
choices.
Confirmation bias only affects personal relationships, not economic
behavior.
Confirmation bias encourages individuals to seek diverse
perspectives, enhancing decision-making.
Confirmation bias has no significant impact on economic decision-
making.
6. Jared decided to remove himself from social media for one week. During
that time, he did not check his Facebook, Twitter, Instagram, or Snapchat
accounts. It didn't take long for Jared to feel isolated and that he was
missing out on what was happening around him. What acronym has been
linked to the feeling Jared experienced?
ZMOT
FOMO
ICYMI
WITH 100% ACCURATE ANSWERS
1. What term describes the phenomenon where individuals believe they
possess greater abilities than they truly do?
Confirmation bias
Underestimation
Overestimation
Anchoring effect
2. If a consumer is struggling with loss aversion regarding a new smartphone
they own, how might they effectively use the Overnight Test?
By consulting friends about their opinions on the smartphone.
By immediately selling the smartphone for cash.
By imagining the smartphone has been replaced with cash and
deciding which they prefer.
By comparing the smartphone's features with competitors.
3. Behavioral economics attempts to explain:
why sunk costs should be ignored in decision making.
why economists behave differently from everyone else.
the behavior of demand curves.
how human psychology influences economic behavior.
4. If a consumer is experiencing the endowment effect, how might this impact
,their decision to sell a used car?
, They will compare the car's value to new models and sell it
immediately.
They will likely sell the car quickly at a low price.
They may overvalue the car and be unwilling to sell it for a fair
market price.
They will seek advice from friends before making a decision.
5. How does confirmation bias affect economic decision-making according to
behavioral economics?
Confirmation bias leads individuals to favor information that aligns
with their existing beliefs, potentially resulting in poor economic
choices.
Confirmation bias only affects personal relationships, not economic
behavior.
Confirmation bias encourages individuals to seek diverse
perspectives, enhancing decision-making.
Confirmation bias has no significant impact on economic decision-
making.
6. Jared decided to remove himself from social media for one week. During
that time, he did not check his Facebook, Twitter, Instagram, or Snapchat
accounts. It didn't take long for Jared to feel isolated and that he was
missing out on what was happening around him. What acronym has been
linked to the feeling Jared experienced?
ZMOT
FOMO
ICYMI
