Question 1

Having more money and a bigger house than other people is the key to happiness. Which economic approach is most consistent with this idea?

Accepted Answer

The answer of Having more money and a bigger house...

Question 2

Requiring people to opt out of organ donation when getting a driver's license is an example of a(n):

Accepted Answer

This is an example of an advantageous default option nudge, where the default choice is set to encourage a socially beneficial outcome, such as organ donation, unless the individual actively opts out.

Question 3

To guide a person through complicated decisions such as whether to get a particular credit card, behavioral economists advocate electronic disclosure in which characteristics such as late fees and high interest rates would be explained clearly. They call this type of nudge a(n):

Accepted Answer

An information nudge involves providing clear and accessible information to help individuals make better decisions, such as explaining fees and rates for credit cards.

Question 4

An employer's insurance program is set up so that employees have to opt out rather than opt in. This is an example of a(n):

Accepted Answer

This is an example of an advantageous default option nudge, where the default setting is designed to benefit the employee unless they choose to opt out.

Question 5

Which of the following do firms take advantage of to maintain high profits?

Accepted Answer

Firms often design choices to take advantage of people's tendency to stick with default options, which can lead to higher profits.

Question 6

Suppose the government passes laws that require restaurants to disclose the nutritional content of their menu items. This would be an example of a:

Accepted Answer

The answer of Suppose the government passes laws that require...

Question 7

What distinguishes nudge policies from push policies?

Accepted Answer

Nudge policies are designed to influence behavior while preserving freedom of choice, aligning with libertarian principles. Push policies, on the other hand, often involve more direct interventions that may not preserve the same level of choice.

Question 8

Sending people letters about their energy usage along with energy-saving tips is:

Accepted Answer

This is an example of an information nudge because it provides people with information and tips to influence their behavior towards energy saving.

Question 9

If workers enroll in a savings plan and are asked to check a box to opt out of it, we are seeing an example of a nudge involving the:

Accepted Answer

The default option is a nudge where the default choice is set to encourage a particular behavior, in this case, enrolling in a savings plan unless they opt out.

Question 10

Suppose the federal government passes laws that require banks to disclose the advantages of having their customers use automatic bill paying (an example of a RECAP policy). This would be an example of a:

Accepted Answer

The answer of Suppose the federal government passes laws that...

Question 11

When online seller Amazon sets the default mail option as two-day mailing instead of the free-shipping option, it is employing:

Accepted Answer

A nudge is a subtle policy shift that encourages people to make decisions that are in their broad self-interest. By setting the default option to two-day mailing, Amazon is gently steering customers towards a faster shipping option without restricting their freedom to choose the free-shipping option.

Question 12

If the RECAP policy was imposed on firms by the government, it would be considered a(n):

Accepted Answer

A "push" refers to a policy or regulation imposed by the government to influence firm behavior, which aligns with the description of the RECAP policy being imposed.

Question 13

Economists agree that:

Accepted Answer

Incentives can sometimes lead to unintended consequences or fail to achieve the desired result due to various factors such as misalignment with goals or external influences.

Question 14

If the government were to regulate the way AT&T presents its phone plans, such a policy would be a:

Accepted Answer

The answer of If the government were to regulate the...

Question 15

The idea that a person wants to have a bigger house in order to outdo his or her neighbors is referred to as:

Accepted Answer

Luxury fever refers to the desire to acquire luxury goods or a bigger house to outdo others, often driven by social comparison.

Question 16

Taxing cigarettes is:

Accepted Answer

The answer of Taxing cigarettes is:
...

Question 17

RECAP is a type of nudge that stands for:

Accepted Answer

RECAP stands for "record, evaluate, and compare alternative prices," which is a type of nudge aimed at helping consumers make better purchasing decisions by comparing prices.

Question 18

If the government were to put policies in place to regulate carbon emissions from factories, such a policy would be a:

Accepted Answer

A "push" refers to a direct regulatory action or mandate by the government to enforce compliance, such as regulating carbon emissions from factories.

Question 19

In Minnesota, tax collectors found that threatening late filers with warnings and fines does not increase tax compliance. Instead, they publicized the fact that most Minnesotans had already filled in their returns. What type of nudge is this?

Accepted Answer

This is an information nudge, as it uses social norms by informing people that most others have already complied, encouraging them to do the same.

Question 20

When people make decisions in which they only mimic what they think other people are doing, they are engaging in:

Accepted Answer

Herding refers to the behavior where individuals mimic the actions of a larger group, often without independent analysis or decision-making.

Quiz 22: Behavioral Economics and Modern Economic Policy