A tendency to overestimate one's abilities

A tendency to underestimate one's abilities

A preference for avoiding risks

A tendency to ignore past experiences

A method to assess the long-term viability of a decision

A quick evaluation conducted during the night

A psychological experiment conducted during sleep

A strategy for managing time-sensitive tasks

Overestimating one's rank or standing relative to others

Placing too much emphasis on one's achievements

Placing too much trust in others

Overestimating the demand for a product or service

A tendency to be overly certain about one's beliefs or judgments

A tendency to underestimate the precision of measurements

A preference for detailed instructions

A tendency to underestimate the time required for a task

Social Media Marketing

Promoting products or services through social media platforms

Marketing strategies aimed at in-person interactions

Traditional advertising methods

Costs that have already been incurred and cannot be recovered

Costs that can be recovered if a project is abandoned

Costs associated with future investments

Costs that are variable and can be adjusted easily

The perceived value gained from completing a transaction

The cost associated with conducting a transaction

The likelihood of encountering errors during a transaction

The duration of a transaction process

Categorizing and treating different types of money differently

Making decisions based on past investments, regardless of future outcomes

A tendency to be overly certain about one's beliefs or judgments

A method to assess the long-term viability of a decision

Which of the following is TRUE about cognitive biases?

Awareness is often the first step to overcoming the influence of a cognitive bias

It is easy to recognize when cognitive biases are influencing our own decisions

There is rarely anything you can do to combat a cognitive bias’ influence

There are only a handful of cognitive biases that exist

Mina wants to start using an investment app that all of her friends are raving about. She hasn’t done any research on the app, but she trusts her friends’ judgment. At home, Mina’s mom points out that Mina is being influenced by FOMO and herd mentality. All of the following are things Mina can do to overcome these cognitive biases EXCEPT…

Watch a positive video about the app, download the app, and start using it that day

Take time to reflect and identify why she is so eager to use the app

Ask people outside her friend group for their opinions and perspectives

Seek out reviews that talk about the disadvantages of using the app

NGPF Unit 1 - Behavior Economics Review

Authored by Robert Sharpe

Financial Education

11th Grade

Used 143+ times

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25 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

This shows how psychological, social, and cognitive factors influence people's decision-making, often deviating from traditional economic assumptions of rationality.

Economics

Psychology

MacroEconomics

Behavior Economics

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

Cognitive Bias

An error in the way we think that can influence our decisions

The desire to seek out information that confirms our existing beliefs

The belief that our abilities are better than they actually are

The concept of placing more value on an item when we own it

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

Confirmation Bias

Our underlying tendency to notice and focus on things that already fit our beliefs

The concept of placing more value on an item when we own it

The belief that our abilities are better than they actually are

An error in the way we think that can influence our decisions

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Endowment Effect

Our underlying tendency to notice and focus on things that already fit our beliefs

The belief that our abilities are better than they actually are

The tendency of people to value items that they own more highly than if they did not belong to them

When the government gives money to small businesses to stimulate growth

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

FOMO

Fear Of Monster Orangutans

Fear of Missing Out

Florida Oranges Mock Ostriches

Fear of making oreos

MULTIPLE CHOICE QUESTION

30 sec • 4 pts

Hedonic Adaptation

The suggestion that our brains seek out new experiences

Doing only what "feels" good to do, not what is good

Following the trends of what everyone else does

None of the above

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Bandwagon Effect

Cowboys Fans and Warriors Fans

The habit of doing what you want because it feels good

The habit of adopting certain behaviors or beliefs because may others do the same

Doing things on your own for your own well thought out reasons

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NGPF Unit 1 - Behavior Economics Review

This shows how psychological, social, and cognitive factors influence people's decision-making, often deviating from traditional economic assumptions of rationality.

Cognitive Bias

Confirmation Bias

Endowment Effect

FOMO

Hedonic Adaptation

Bandwagon Effect

This describes how our decision making gets worse as we make additional choices, causing our cognitive abilities to get worn out.

This is the process of attaching a reward to a given behavior

This is when our memories of a specific time, place, or things can cause us to spend money on things that remind us of that thing. Ex: You really need to save some money, but you come across your favorite childhood snack that you have not seen in a long time.

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