Deck 21: Social Psychology and Personal Finance

Question 1

The fear of losing deactivates the ______region of the brain.

A) pleasure-seeking
B) decision-making
C) anger-producing
D) sadness-inducing

Answer 1

decision-making

Question 2

As part of a promotion, a restaurant offers a frequent diner card. The average cost of a meal at this restaurant is $10. After 4, full priced meals, a rewards member gets 1 "free" $5 appetizer. What does this exemplify?

A) payment decoupling
B) compulsive hoarding syndrome
C) mere ownership effect
D) mental accounting

Answer 2

payment decoupling

Question 3

In Sweden, it is assumed that people who die unexpectedly do want to be organ donors. This is an example of a ______.

A) default decision
B) mere ownership effect
C) reference price
D) hedonic treadmill

Answer 3

default decision

Question 4

Which of the following maybe caused by the extreme need to avoid loss?

A) compulsive hoarding syndrome
B) auction fever
C) mere ownership effect
D) endowment effect

Question 5

Gambling with poker chips rather than real money at a casino is an example of ______.

A) compulsion
B) payment decoupling
C) mere ownership effect
D) mental accounting

Question 6

Which of the following appears to be a way to slow down the hedonic treadmill?

A) working less hours
B) making more money
C) physical exercise
D) travel

Question 7

Which of the following refers to a tendency to overbid an item in a socially competitive environment?

A) neural circuitry of reward
B) auction fever
C) mere ownership effect
D) endowment effect

Question 8

Which of the following terms refers to the idea that some make decisions based on a "consume now, pay later" mentality?

A) compulsion
B) mental accounting
C) mere ownership effect
D) payment decoupling

Question 9

Prior to deciding to start a family, Sarah and Drew open a new checking account, designated "baby money" to begin saving for anticipated childcare expenses. What does this exemplify?

A) compulsive hoarding syndrome
B) mental accounting
C) mere ownership effect
D) endowments

Question 10

The colloquialism "Keeping up with the Jones" refers to how one always desires more and better items commensurate with what others might have. This could also be viewed as an example of which of the following?

A) payment decoupling
B) mere ownership effect
C) default decision
D) hedonic treadmill

Question 11

Which of the following refers to a basis or standard used to estimate value?

A) mental accounting
B) payment decoupling
C) reference points
D) default decisions

Question 12

Our reference points for happiness are______.

A) fixed
B) unclear
C) subjective
D) flexible

Question 13

Some cars automatically shut off once the car has experienced a forceful impact, such as a crash. This automatic shutoff is an example of which of the following?

A) payment decoupling
B) default decision
C) mere ownership effect
D) hedonic treadmill

Question 14

Which of the following refers to a set of brain neurons that respond to actual and anticipated rewards?

A) neural circuitry of reward
B) auction fever
C) mere ownership effect
D) endowment effect

Question 15

In order to help her budget her money, Coraline separates her money into different checking accounts for different expenses. One month, she receives a notice from her bank that her "rent" account is at a zero balance. Even though she has money in her other checking accounts, she decides to ask her mother for a loan to pay her rent. Which of the following does this exemplify?

A) Coraline is exhibiting compulsive hoarding syndrome.
B) Coraline cannot pay her rent due to the mere ownership effect.
C) Coraline is trying to treat her money as if it were not fungible.
D) Coraline has divided her expenses, showing a practice of payment decoupling.

Question 16

You are in line waiting for a store to open so that you can purchase a deeply discounted television. Since they only have a few discounted TVs left, the store begins to auction off the last claim tickets that will allow you to purchase the TV. You see the stack of boxes and begin imagining where you will put the television. What does this exemplify?

A) compulsive hoarding syndrome
B) auction fever
C) mere ownership effect
D) loss aversion

Question 17

What is another word for fungibility?

A) compulsion
B) rationality
C) hoarding
D) interchangeability

Question 18

The statement "full prices dressed up in discount tags" refers to how merchandisers may skew consumers sense of ______.

A) mental accounting
B) their money's fungibility
C) reference points
D) their own hedonic treadmill

Question 19

In auction fever experiments, which trigger overbidding?

A) embarrassment and desire
B) anger and frustration
C) excitement and fear
D) anticipation and sadness

Question 20

One experiment found that which of the following overrode rats' desire to eat, drink, sleep, or engage in sexual activity?

A) embarrassment
B) fear of failure
C) anger
D) anticipation of gains

Question 21

Describe how loss aversion may affect one's ability to make financial decisions.

Question 22

Opportunity costs is the cost of not seeking an opportunity.

Question 23

The pain of losing is psychologically more powerful than the pleasure of gaining.

Question 24

The anticipation of winning and fear of losing activate the same neural circuits.

Question 25

Constant dissatisfaction with what you have currently and always grasping for something better explains the hedonic treadmill.

Question 26

Describe an example of the hedonic treadmill that you have experienced or that you have seen depicted in popular media (television, movie, book). In your description, note why this would be considered an example of the hedonic treadmill.

Question 27

What role does opportunity of costs play in merchandiser's use of reference prices and discounts?

Question 28

Mental accounting systems rely on reference points.

Question 29

Discounts are a way for merchandisers to ______.

A) help consumers feel they've been "smart shoppers"
B) encourage use of new products
C) temporarily depress revenue in order to gain more customers
D) eliminate product habits

Question 30

Describe the relationship between financial self-control and fungibility. What challenges might a college student face in relation to these two concepts?

Question 31

In general, people tend to ______ default decision points.

A) go along with
B) avoid
C) ignore
D) detest

Question 32

Not placing a limit on how many items a consumer may purchase encourages them to buy more of a certain product.

Question 33

Discounts encourage accelerated consumption.

Question 34

The mere ownership effect is also called the endowment effect.

Question 35

Which of the following reduces a merchandiser's holding costs and risks to inventory?

A) discounts
B) default decisions
C) the hedonic treadmill
D) product habits

Question 36

Consider the concept of payment decoupling. Describe a real or fictional example payment decoupling. What affect did the payment decoupling have?

Question 37

Price tags on clothing are an example of which of the following?

A) default decisions
B) payment decoupling
C) endowment effect
D) reference points

Question 38

Which of the following refers to what happens when we do nothing?

A) hedonic treadmill
B) default decision
C) mere ownership effect
D) endowment effect

Question 39

Widowhood has been shown to encourage the hedonic treadmill.

Question 40

Mental accounting refers to how we rick ourselves into thinking money is not fungible.