Question 1

Commitment devices can be:
A) a tool to help people avoid temptation.
B) an informal arrangement.
C) formal policies set up through an employer or third party.
D) All of these statements are true.

Accepted Answer

Commitment devices can take different forms, including tools designed to help individuals avoid temptation, informal arrangements made between individuals or groups, and formal policies set up through an employer or third party. Therefore, all of the statements are true.

Question 2

The Save More Tomorrow (SMarT)program is an example of a:
A) weak commitment device that was successful.
B) strong commitment device that was successful.
C) weak commitment device that was unsuccessful.
D) strong commitment device that was unsuccessful.

Accepted Answer

The answer of The Save More Tomorrow (SMarT)program is an...

Question 3

Commitment devices are:
A) methods to increase the price of your vices.
B) methods to lower the price of your virtues.
C) successful whether weak or strong, depending on the situation.
D) All of these statements are true.

Accepted Answer

Commitment devices can involve increasing the cost of vices, lowering the cost of virtues, and their success can vary depending on the situation, making all statements true.

Question 4

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.

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.

Question 5

A person cutting up her credit cards in an effort to curb her spending is an example of:
A) status quo bias.
B) a commitment device.
C) the endowment effect.
D) loss aversion.

Accepted Answer

Cutting up the credit cards is a commitment device, which is a self-imposed restriction designed to prevent future behavior that may not align with one's long-term goals.

Question 6

A heuristic is a:
A) positive-framing method.
B) mental shortcut that helps us make decisions.
C) method to increase the price of your vices.
D) formal policy used by firms to drive employee behavior.

Accepted Answer

A heuristic is a mental shortcut that helps us make decisions. It is a cognitive bias that allows us to simplify complex problems or make judgments quickly. Heuristics can be useful in many situations, but they can also lead to errors in judgment or decision-making.

Question 7

Commitment devices can be:
A) a way to use choice architecture to help you avoid temptation.
B) formal policies or products.
C) a way for people to voluntarily restrict their choices in order to make it easier to stick to plans.
D) All of these statements are true.

Accepted Answer

All of these statements are true. Commitment devices can use choice architecture to help avoid temptation, be formal policies or products, or be a voluntary restriction on choices to aid in sticking to plans.

Question 8

Susie doesn't buy ice cream this week at the grocery store because she intends to start a diet in a few days.Her behavior is an example of:
A) a commitment device.
B) status quo bias.
C) the endowment effect.
D) positive framing.

Accepted Answer

Susie's decision to not buy ice cream as a way to stick to her future diet plan is an example of a commitment device, which is a strategy to lock oneself into a course of action that aligns with long-term goals.

Question 9

Jessica's workplace is collecting money for a lottery pool.Each employee can choose to contribute $50,with a 1 in 600,000 chance of winning $1 million.If Jessica chooses not to contribute to the lottery pool,she is probably experiencing:
A) positive framing.
B) the endowment effect.
C) loss aversion.
D) status quo bias.

Accepted Answer

Jessica is experiencing loss aversion, where she is motivated more by potential losses than potential gains. By not contributing to the lottery pool, she avoids the loss of $50, even though there is a small chance of gaining $1 million.

Question 10

A person committing to carpool with a friend to the gym for daily workouts is an example of:
A) status quo bias.
B) the endowment effect.
C) a commitment device.
D) positive framing.

Accepted Answer

This is an example of a commitment device, which is a strategy to help individuals follow through on their goals or intentions by making them feel more accountable or obligated. By committing to carpooling with a friend, the person is less likely to skip their gym workouts and is more likely to maintain a regular exercise routine. The other options may not be as applicable in this scenario – status quo bias refers to a preference for maintaining the current situation, the endowment effect is a tendency to overvalue items that we own or possess, and positive framing involves using positive language to influence decision making.

Question 11

Commitment devices:
A) need strong commitments that are hard to get out of in order to be successful.
B) are never strong commitments that are hard to get out of.
C) can be successful whether they have strong or weak commitments.
D) are only successful if they are weak commitments that are easy to change.

Accepted Answer

Commitment devices can be successful with either strong or weak commitments, as their effectiveness depends on the individual's motivation and the context in which they are used.

Question 12

Commitment devices are:
A) mechanisms that allow people to voluntarily restrict their choices in order to make it easier to stick to plans.
B) socially institutionalized practices that signal a particular commitment has been made by a person.
C) policies that force participants to choose their future commitments.
D) None of these statements is true.

Accepted Answer

Commitment devices are mechanisms that individuals use to voluntarily constrain their choices and actions in order to achieve a desired outcome or goal. These devices can take many forms, including financial incentives, deadlines, social support, or technology-based solutions, such as apps or websites that limit access to distracting content. The goal of commitment devices is to help individuals overcome procrastination, impulsiveness, and other self-control problems, by precommitting to a course of action that aligns with their long-term interests.

Question 13

In terms of framing,we respond better to:
A) negative framing.
B) neither; research has shown that framing ultimately doesn't matter.
C) consistent framing.
D) positive framing.

Accepted Answer

Research has shown that individuals tend to respond better to positive framing, which emphasizes potential gains and benefits, rather than negative framing, which emphasizes potential losses and risks. Consistent framing, which involves using the same framing consistently throughout a message, can also be effective in achieving the desired response, but positive framing is generally considered the most effective.

Question 14

John is buying a scented candle for his girlfriend.John thinks about her flower-scented perfume,flower-scented air spray,and flower-scented shampoo.He decides to buy her a flower-scented candle.His behavior is:
A) using a heuristic called a rule of thumb.
B) an example of the endowment effect because she already has flower-scented goods.
C) an example of loss aversion because he doesn't want to make the wrong choice.
D) an example of status quo bias because he doesn't want to deviate from her normal choice of scent.

Accepted Answer

John is using a heuristic called a rule of thumb by choosing a scent that is familiar to him based on his girlfriend's other flower-scented products. He is making a quick decision based on limited information and prior experience.

Question 15

A store is choosing between advertising a credit card fee or a discount for paying cash to its customers.More customers are likely to pay cash if the store owner advertises:
A) the credit card fee.
B) the discount for paying cash.
C) either one; since it's the same outcome, people won't care one way or another.
D) neither one; since people are not likely to pay cash more regardless of how it's advertised.

Accepted Answer

People tend to avoid losses more than they seek gains, so advertising a credit card fee (a loss) is more likely to encourage customers to pay cash to avoid the fee.

Question 16

If someone asked you to predict the price of gas in a month,and you decided to just guess by adding a few cents to the current price of gas,which you know,your answer would exhibit:
A) anchoring.
B) time inconsistency.
C) rational expectations.
D) transitivity.

Accepted Answer

The guessing by adding a few cents to the current price of gas is an example of anchoring, where the initial information (current gas price) affects the decision or prediction made.

Question 17

Suppose you were asked,"Can you guess the height of the tallest living man? Is it more than 8 feet?" When people suggest an answer in the question they ask,it is a form of:
A) anchoring.
B) rule of thumb.
C) time inconsistency.
D) positive framing.

Accepted Answer

The suggestion in the question that the height of the tallest living man could be more than 8 feet is an example of anchoring. Anchoring happens when an individual is influenced by a reference point or suggestion when making a decision or estimation. In this case, the suggestion that the height could be more than 8 feet sets a reference point, and the individual is likely to estimate a higher height than they would have without the suggestion.

Question 18

Cyndi says to you,"I'm wondering if I should study abroad in France." You studied in Germany two years ago,and found the cost of living (not counting tuition)to be about $5,000 for a semester,so you say,"I bet it will cost you about $5,000,not counting tuition." Your answer demonstrates:
A) biased expectations.
B) anchoring.
C) using a piece of information loosely related and applying it to your guess.
D) All of these statements are true.

Accepted Answer

The answer of Cyndi says to you,"I'm wondering if I...

Question 19

An example of a heuristic is:
A) predatory lending.
B) a rule of thumb.
C) common sense.
D) a framing device.

Accepted Answer

A heuristic is a mental shortcut or "rule of thumb" that helps solve problems quickly and efficiently.

Question 20

Amanda is from Vermont and visiting California for the first time.At home,Amanda always goes jogging early in the morning because it's hottest in the early afternoon.Not knowing what to expect of the weather in California,she decides to go jogging in the early morning during her visit.This decision is an example of:
A) loss aversion.
B) status quo bias.
C) a heuristic.
D) positive framing.

Accepted Answer

Amanda's decision to jog in the early morning in California, based on her experience in Vermont, is an example of a heuristic. She is using a mental shortcut based on her previous experience to make a decision in a new situation.

Quiz 23: Public Policy and Choice Architecture

Commitment devices can be:

The Save More Tomorrow (SMarT) program is an example of a:

Commitment devices are:

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 person cutting up her credit cards in an effort to curb her spending is an example of:

A heuristic is a:

Commitment devices can be:

Susie doesn't buy ice cream this week at the grocery store because she intends to start a diet in a few days.Her behavior is an example of:

Jessica's workplace is collecting money for a lottery pool.Each employee can choose to contribute $50,with a 1 in 600,000 chance of winning $1 million.If Jessica chooses not to contribute to the lottery pool,she is probably experiencing:

A person committing to carpool with a friend to the gym for daily workouts is an example of:

Commitment devices:

Commitment devices are:

In terms of framing,we respond better to:

John is buying a scented candle for his girlfriend.John thinks about her flower-scented perfume,flower-scented air spray,and flower-scented shampoo.He decides to buy her a flower-scented candle.His behavior is:

A store is choosing between advertising a credit card fee or a discount for paying cash to its customers.More customers are likely to pay cash if the store owner advertises:

If someone asked you to predict the price of gas in a month,and you decided to just guess by adding a few cents to the current price of gas,which you know,your answer would exhibit:

Suppose you were asked,"Can you guess the height of the tallest living man? Is it more than 8 feet?" When people suggest an answer in the question they ask,it is a form of:

Cyndi says to you,"I'm wondering if I should study abroad in France." You studied in Germany two years ago,and found the cost of living (not counting tuition) to be about $5,000 for a semester,so you say,"I bet it will cost you about $5,000,not counting tuition." Your answer demonstrates:

An example of a heuristic is: