Even though there is a nonzero probability that Fullington will have a serious and expensive medical issue requiring treatment in the next few years, he refuses to buy insurance. Which lesson from behavioral economics explains why he makes that choice?
A) bounded rationality
B) Consumers like choices but not too many.
C) People like fairness.
D) susceptibility to framing

Question

Quizplus · Accepted Answer

Bounded rationality explains Fullington's choice because it suggests that individuals make decisions based on the limited information they have and their limited cognitive abilities, leading them to overlook or undervalue the potential benefits of insurance against rare but costly events.

Even Though There Is a Nonzero Probability That Fullington Will