A person setting up automatic deductions through her employer so a portion of her pay goes into a "Christmas account" is an example of:
A) status quo bias.
B) the endowment effect.
C) positive framing.
D) a commitment device.

Question

Quizplus · Accepted Answer

This is an example of a commitment device, as the person is setting up automatic deductions to ensure they save for Christmas, which is a way to make it harder for them to deviate from their saving goal. It also involves positive framing, as the person is framing it as a "Christmas account" which is a positive and rewarding goal to save for. It doesn't necessarily involve status quo bias or the endowment effect.

A Person Setting Up Automatic Deductions Through Her Employer So