Question 1

By studying the effects of choice architecture, we can:
A)expand the simplifying assumption that people always make the choices that are best for themselves.
B)blend the ideas of psychology with core economic beliefs.
C)be open to the possibility that we can no longer tell if someone is making a mistake or choosing something that is maximizing his utility.
D)All of these are true.

Accepted Answer

Choice architecture studies expand the simplifying assumption by acknowledging that people don't always make the best choices for themselves, blend psychology with economics, and recognize the complexity in determining if a choice is a mistake or maximizes utility.

Question 2

The Save More Tomorrow (SMarT)program offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account. Which of the following was not a finding of this program?
A)People want to save more than they typically do.
B)Participants quadrupled their savings in just a couple of years.
C)If the default choice is to save a portion of income, people will save more.
D)People were already saving at an optimal amount, so the program had no effect.

Accepted Answer

The Save More Tomorrow program found that people generally want to save more than they do, that participants significantly increased their savings, and that making saving the default choice leads to higher savings rates. The statement that people were already saving at an optimal amount, so the program had no effect, is incorrect because the program did indeed lead to increased savings among participants.

Question 3

When considering choice architecture, a nudge:
A)only provides participants with choices that are good for them.
B)can sometimes accomplish public policy goals in a less expensive way than traditional methods.
C)presents choices that are similar to, but more equitable than, participants' ideal choices.
D)is a deliberate push by a choice architect to ensure all people behave a certain way.

Accepted Answer

Nudges are subtle design changes in the way choices are presented or structured, aiming to influence behavior in a predictable way without forbidding any options or significantly changing their economic incentives. They can be a cost-effective method for achieving public policy goals by gently guiding individuals towards beneficial behaviors without heavy-handed regulations or significant financial investments.

Question 4

A choice architect is someone who:
A)determines which choices are available to builders in a specific area.
B)designs areas that have a lot of choices in determining how the space is used.
C)is in a position to shape the decision-making environment.
D)determines how people should make decisions inside of a specific environment.

Accepted Answer

A choice architect is someone who has the responsibility or authority to organize the context in which people make decisions. This concept is widely recognized in behavioral economics and psychology, where the structuring of choices can significantly influence the decisions people make, without restricting their freedom of choice.

Question 5

The SMarT program, which offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account, is designed to overcome which common barrier to saving? Status quo bias An unwillingness to forgo current consumption The endowment effect
A)II and III only
B)I and III only
C)I and II only
D)I, II, and III

Accepted Answer

The SMarT program is designed to overcome the status quo bias by making saving the default option and an unwillingness to forgo current consumption by only allocating future pay raises, not current income, to savings.

Question 6

Which of the following is not a traditional economic view regarding choice architecture?
A)There is no such thing as a bad choice.
B)Choice architecture is ineffective.
C)Revealed preference shows researchers what an individual's preferred choices are.
D)Choice architects have a responsibility to remain neutral when it comes to choices.

Accepted Answer

The answer of Which of the following is not a...

Question 7

Status quo bias is:
A)when a person's choice is influenced by others' opinions.
B)a reluctance to make active decisions to change something, even if it is fairly easy to do so.
C)an unwillingness to change future decisions to match current choices.
D)All of these are true.

Accepted Answer

Status quo bias refers to the preference to keep things the same or maintain a previous decision rather than change. This bias leads individuals to prefer the current state of affairs and resist changes, even when such changes might lead to better outcomes.

Question 8

Status quo bias:
A)is a type of mental barrier to saving.
B)occurs when people actively make decisions to change, even if it is fairly difficult to do so.
C)is when people exhibit when they change their behavior to match others around them.
D)occurs when people have a negative view on the status quo.

Accepted Answer

Status quo bias refers to the preference to keep things the same or maintain a current or previous decision. It is a cognitive bias that can act as a barrier to saving because individuals may prefer to stick with current financial habits rather than making changes that could potentially improve their savings.

Question 9

Neutral policy with respect to choice architecture is:
A)not a clear concept in most choice scenarios.
B)well established in all choice scenarios.
C)the goal of all choice architects.
D)generally regulated by state and federal government.

Accepted Answer

Neutral policy in choice architecture is difficult to define clearly in most scenarios because the design of choices inevitably influences decisions, making true neutrality challenging to achieve.

Question 10

Choice architecture focuses on factors such as: the timing of choices. how different options are described. the default option.
A)II only
B)II and III only
C)I and III only
D)I, II, and III

Accepted Answer

Choice architecture involves all these factors: the timing of choices, how options are described, and what the default option is, as these can all influence decision-making.

Question 11

When considering choice architecture, a nudge:
A)is a gentle push in a particular direction.
B)does not take away any options.
C)allows anyone who wants to go in a different direction to do so.
D)All of these are true.

Accepted Answer

Nudges are designed to influence decisions and behaviors in a predictable way without forbidding any options or significantly changing their economic incentives. They provide a gentle push towards a particular choice while still allowing individuals the freedom to choose otherwise, thus encompassing all the characteristics listed.

Question 12

Suppose Maya announces that she would like to make healthier choices, but she does not follow through on actually making these choices. Traditional economic theory would conclude that: Maya's revealed behavior shows that the benefits of altered behavior must not outweigh the costs. Maya made a bad choice. Maya has incorrect preferences.
A)I only
B)II and III only
C)II only
D)I, II, and III

Accepted Answer

Traditional economic theory often assumes that individuals have stable preferences and that their choices reveal those preferences. If Maya announces she wants to make healthier choices but does not follow through, traditional economic theory would interpret this as her revealed preferences showing that the benefits of making healthier choices do not outweigh the costs for her. It does not necessarily imply that she made a bad choice or has incorrect preferences, as those judgments are more normative and subjective.

Question 13

In choice architecture, a "bad choice" is one that:
A)policymakers want to nudge participants away from.
B)the chooser will regret later.
C)is considered not optimal by the choice architect.
D)policymakers consider not optimal for society, despite benefitting the individual chooser.

Accepted Answer

The answer of In choice architecture, a "bad choice" is...

Question 14

The implementation of choice architecture that alters people's behavior in a deliberate and predictable way without greatly changing economic incentives is called:
A)influencing through choice.
B)nudging.
C)shifting.
D)baiting.

Accepted Answer

Nudging refers to the concept of altering people's behavior in a subtle way without forbidding any options or significantly changing their economic incentives. It's a strategy used in behavioral economics and psychology to influence decisions while preserving freedom of choice.

Question 15

Behavioral economists accept that: people try to maximize their well-being but sometimes make mistakes. most mistakes in behavior are unpredictable. they must remain neutral when designing choice architecture.
A)I only
B)II and III only
C)I and III only
D)I, II, and III

Accepted Answer

Behavioral economists recognize that while individuals aim to maximize their well-being, they can make predictable errors, not unpredictable ones. They also believe in influencing decisions through choice architecture, which means they do not always remain neutral.

Question 16

The organization of the context and process in which people make decisions is called:
A)political structure.
B)choice architecture.
C)ways and means theory.
D)heuristics.

Accepted Answer

Choice architecture refers to the organization of the context and process in which people make decisions, influencing their choices without restricting options.

Question 17

The success of the SMarT program, which offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account, has proven that changing the way options are presented can:
A)affect people's behavior.
B)help people overcome mental biases.
C)allow people to avoid regret.
D)All of these statements are true.

Accepted Answer

The SMarT program's success demonstrates that altering how choices are presented can influence people's behavior, assist them in overcoming mental biases, and help them avoid regret by making more prudent financial decisions for the future.

Question 18

Choice architecture is the:
A)organization of the context and process in which people make decisions.
B)structure that forces utility-maximizing decisions for individuals.
C)political framework under which policy is made.
D)the mental framework people use to make all of their decisions.

Accepted Answer

Choice architecture refers to the way in which choices are presented to consumers, influencing the decision-making process without eliminating options or significantly changing their economic incentives. It organizes the context and process in which people make decisions.

Question 19

Choice architecture can:
A)alter actual decisions and thus the ultimate outcomes.
B)make it easier for people to make choices that will make them happier in the long run.
C)help people make better choices without eliminating free choice.
D)All of these statements are true.

Accepted Answer

Choice architecture can indeed alter actual decisions and outcomes, make it easier for people to make choices that lead to long-term happiness, and help people make better choices without removing free choice. These are all strategies used to design environments that guide decision-making in a beneficial way.

Question 20

A mistake is a choice that:
A)the chooser later regrets.
B)is created by a choice architect but has unintended consequences.
C)leaves society as a whole worse off, but may still benefit the chooser.
D)policymakers think choosers should not make.

Accepted Answer

A mistake is often defined as a choice that the chooser later regrets, indicating that the decision did not lead to the desired outcome or satisfaction.

Quiz 23: Public Policy and Choice Architecture

By studying the effects of choice architecture, we can:

The Save More Tomorrow (SMarT) program offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account. Which of the following was not a finding of this program?

When considering choice architecture, a nudge:

A choice architect is someone who:

The SMarT program, which offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account, is designed to overcome which common barrier to saving? Status quo bias An unwillingness to forgo current consumption The endowment effect

Which of the following is not a traditional economic view regarding choice architecture?

Status quo bias is:

Status quo bias:

Neutral policy with respect to choice architecture is:

Choice architecture focuses on factors such as: the timing of choices. how different options are described. the default option.

When considering choice architecture, a nudge:

In choice architecture, a "bad choice" is one that:

The implementation of choice architecture that alters people's behavior in a deliberate and predictable way without greatly changing economic incentives is called:

Behavioral economists accept that: people try to maximize their well-being but sometimes make mistakes. most mistakes in behavior are unpredictable. they must remain neutral when designing choice architecture.

The organization of the context and process in which people make decisions is called:

The success of the SMarT program, which offers employees the option to commit a fraction of future pay raises to a tax-free retirement savings account, has proven that changing the way options are presented can:

Choice architecture is the:

Choice architecture can:

A mistake is a choice that: