Question 1

Participants in a study of decision making were asked to rate a particular financial solution for solving a dispute with a neighbor. Half of the participants rated the favorability of a solution in which they would receive $600 and their neighbor would receive $800; the other half of participants rated a solution in which each received $500. Which option was most favorably rated?

Accepted Answer

People often prefer fairness and equality, so the option where both parties receive the same amount ($500 each) is likely to be rated more favorably.

Question 2

The tendency to give more weight to possible losses than to possible gains when making decisions that require trade-offs is known as ____.

Accepted Answer

The tendency to give more weight to possible losses than to possible gains when making decisions that require trade-offs is known as risk aversion. Thus, the best choice is letter C. The certainty effect refers to the tendency to overweight outcomes that are certain relative to those that are merely probable. Temporal discounting refers to the phenomenon whereby people prefer smaller, sooner rewards to larger, later rewards. The status quo bias refers to the preference for things to stay the same by doing nothing or by sticking with a decision made previously.

Question 3

William James, the father of American psychology, once wrote: "Thinking is for doing." What did he mean by this?

Accepted Answer

William James believed that thinking is not an end in itself, but rather it serves to help individuals act effectively in the world. Thus, the purpose of cognitive processes is to facilitate behavior, decision-making, and problem-solving. James argued that the evolution of cognitive abilities was shaped by natural selection to help organisms better navigate their environments and achieve their goals.

Question 4

Mark is comparing two jobs. One pays $70,000 per year, but will be very stressful. The other pays $60,000, but will be less stressful. According to research presented in your text on Money Matters, Mark will ____.

Accepted Answer

Research suggests that while people often believe more money will make them happier, they may choose higher-paying jobs despite knowing that less stressful, lower-paying jobs might lead to greater happiness.

Question 5

Most research focuses on the ____ step of decision-making, which involves ____.

Accepted Answer

The answer of Most research focuses on the ____ step...

Question 6

As discussed in the text, when purchasing a car, people end up paying a bit more attention than intended to choices such as color and engine size, and a bit less attention than intended on information such as the chances of fatalities should there be an accident with the car. This pattern can be taken as evidence for ____.

Accepted Answer

The certainty effect refers to the tendency for people to give greater weight to outcomes that are certain, which can lead to neglecting less certain but potentially more important information, such as safety features in a car.

Question 7

MOST people show a tendency ____ when making decisions that require tradeoffs.

Accepted Answer

This tendency is known as loss aversion and has been found to be prevalent in decision making. People tend to be more affected by the possibility of losing something than the possibility of gaining something, so they may give more weight to possible losses than to possible gains.

Question 8

Research on decision-making indicates that there are two main steps in making choices. They are ____.

Accepted Answer

Whittling the full range of choices down to a limited few and then carefully considering these remaining few options is the most accurate description of the two main steps in making choices according to research on decision-making. This process involves first eliminating options that are not feasible or desirable, and then comparing the remaining options based on various criteria such as feasibility, desirability, and potential consequences. This approach allows for a more systematic and rational decision-making process.

Question 9

When you are deciding between two apartments, assuming you can afford both of them and they are both adequate for your needs, what feature should you pay most attention to if you want to maximize your satisfaction with the apartment a year after you have moved in?

Accepted Answer

Neighborhood quality is the feature that will have the most impact on your satisfaction with the apartment a year after you have moved in. While affordability and size are important factors, a pleasant neighborhood with lots of things to do will improve your quality of life and make you more content with your living situation.

Question 10

Research suggests that when athletes who are preparing for a big game visualize themselves training really hard for the game, they ____; when they visualize themselves actually winning the game, they ____.

Accepted Answer

Research suggests that athletes who visualize themselves training hard for a big game tend to train harder than usual and perform better. On the other hand, athletes who visualize themselves winning the game tend to feel a sense of accomplishment and satisfaction, which may lead them to train less and potentially perform worse. However, since the question asks for both scenarios, the correct option is D, as athletes who visualize both scenarios would tend to train harder than usual and perform better, and also tend to perform a little better when visualizing themselves winning the game.

Question 11

What is temporal discounting?

Accepted Answer

Temporal discounting refers to the tendency for people to place greater weight on the present over the future in decision-making. It is a cognitive bias that can lead to choices that prioritize short-term gains over long-term benefits. Option A refers to planning fallacy, option C refers to optimism bias, and option D refers to recency bias.

Question 12

Research shows that when making decisions, MOST people are more interested in ____ as opposed to ____.

Accepted Answer

Research shows that people are more motivated to avoid losses than to pursue gains. This is known as loss aversion, and it suggests that people are more sensitive to potential losses than to potential gains. Therefore, when making decisions, people are more interested in avoiding losses than in pursuing gains.

Question 13

Participants in a study of decision making considered two different ways of resolving a dispute with a neighbor. In one solution, the participant received $600 and the neighbor received $800. In the other solution, the participant and the neighbor each got $500. When participants compared the two possible solutions, which option did they prefer?

Accepted Answer

The answer of Participants in a study of decision making...

Question 14

The tendency for people to place greater weight on the present over the future in decision-making is known as ____.

Accepted Answer

Temporal discounting refers to the tendency for people to value immediate rewards or costs more than those that occur in the future. In other words, people tend to prioritize the present over the future. The other options (certainty effect, reactance, now-or-never effect) are different decision-making biases.

Question 15

When people are making choices between two options that differ both qualitatively and quantitatively, they tend to focus on ____.

Accepted Answer

The answer of When people are making choices between two...

Question 16

The so-called "certainty effect" in decision-making refers to tendency for people to give greater weight to ____ than to ____.

Accepted Answer

The certainty effect in decision-making refers to the tendency for people to give greater weight to definite outcomes (certainties) than to probabilities (uncertainties). This means that people are more likely to choose an option with a guaranteed outcome, even if the probability of a better outcome exists with another option.

Question 17

People tend to say that they would prefer to have $1000 today rather than $1200 two weeks from now-even though, logically, they would be better off with the $1200 in two weeks. The phenomena underlying this tendency is known as ____.

Accepted Answer

This phenomenon is known as temporal discounting, which refers to the tendency for people to value immediate rewards more than delayed rewards, even when the latter are objectively better. In this case, receiving $1000 today is an immediate reward, while receiving $1200 in two weeks is a delayed reward.

Question 18

Even though she is not in desperate need of boots, Ellen says that she would rather buy a pair of boots today (for $200) rather than wait two weeks, when they will be on sale for half the price. Ellen's decision most likely involves ____.

Accepted Answer

Ellen's decision involves temporal discounting, which is the tendency to choose a smaller reward in the present over a larger reward in the future. In this case, Ellen values having the boots now more than saving money in two weeks, even though waiting would result in a better financial outcome.

Question 19

Many people do not invest in 401K plans or other retirement plans-even though they are not broke, and could afford to put money aside. One explanation for this is the fact that people tend to engage in ____ when making decisions about how to manage their money.

Accepted Answer

Temporal discounting refers to the tendency to prefer smaller, immediate rewards over larger, delayed rewards, which can lead people to prioritize current spending over saving for retirement.

Question 20

Joe has a big Spanish exam coming up next week. Will it help him if he visualizes himself "acing" the exam? What about if he visualizes himself studying really hard for the exam?

Accepted Answer

Visualizing the process of studying hard can lead to increased motivation and actual study behavior, which is more effective than just visualizing the end result of acing the exam.

Quiz 4: Choices and Actions