BEHAVIORAL ECONOMICS, MARKETS, AND PUBLIC POLICY MIDTERM PRACTICE EXAM WITH NEATLY ANSWERED QUESTIONS AND CORRECT ANSWERS.

BEHAVIORAL ECONOMICS, MARKETS, AND PUBLIC POLICY MIDTERM PRACTICE EXAM WITH NEATLY ANSWERED QUESTIONS AND CORRECT ANSWERS. How has behavioural economics been used by UK and US governments? - Answer-Allows the government and decision makers to design policy interventions, e.g. healthcare interventions, to enable them to achieve policy goals more effectively. Behavioural economics argues that individuals are not fully rational. What happens as a result? - Answer-As a result of not being fully rational, individuals regularly suffer from behavioural biases that make it difficult for them to achieve the results they actually prefer. In this situation, government intervention should aid at helping individuals to achieve an outcome that is in their own best interest. Behavioural economics methods that can be used to lead people into making particular choices? (4) - Answer-Choice architecture. Framing. Mandated choices. Restricted choice. Individual's choices can be influenced by affecting the choices available: (3) - Answer-Default choice. Restricted choice. Mandated choice. Economic policy can be influenced by behavioural theory. 1. Name the behavioural economic uses - AnswerChoice architecture. Framing. Nudges. Choice architecture - Answer-The different ways choices can be presented to consumers, and the impact this has on consumer decision making. Framing - Answer-When the choices are presented in a way (the 'frame') that is intended to encourage a given response. (How something is presented (the 'frame') influences the choices people make) Nudges - Answer-Ways of influencing individual's choices in a particular direction, but without removing their freedom of choice Mandated choice - Answer-When people ar