0) Ward Edwards (1954: Theory of Decision Making) writes that “The crucial fact about
economic man is that he is rational. This means two things:” Which two things are needed,
according to Edwards, to be rational?
a. Complete information and infinite sensitivity.
b. Weak ordering of states that he can get and infinite sensitivity.
c. Complete information and maximization.
d. Weak ordering of states that he can get and maximization.
1) In the lectures, we described the assumptions in economics. According to these
assumptions, people should...
a. use feeling-is-for-doing, have stable preference, and have complete information.
b. be self-interested, have a short-term perspective, and have no cognitive limitations.
c. have unlimited will-power, have complete information, and be self-interested.
d. maximize, be fair, and have stable preferences.
2) How does one calculate Expected Value?
a) probability of an outcome ✕ value of that outcome
b) probability of an outcome ✕ subjective value of that outcome
c) Subjective probability of an outcome ✕ value of that outcome
d) Subjective probability of an outcome ✕ subjective value of that outcome
3) The St. Petersburg Paradox showed the limitations of a decision theory. Which one?
a) Game Theory
b) Expected Value Theory
c) Prospect Theory
d) Expected Utility Theory
4) In people’s responses to Kahneman and Tversky’s (1984; Choices, Values and Frames)
Asian Disease problem, an important assumption of the theory of rational choice is violated.
Which one?
a) Stable preferences
b) Self-interest
c) Rational discounting of the future
d) Maximization
5) The reflection-effect is explained in Prospect Theory by?
a) Loss aversion
b) The shape of the probability weighting function
c) The curvature of the probability weighting function
d) The shape of the value-function
6) What is true with respect to hedonic editing in mental accounting?
a) People prefer to integrate two negative outcomes
b) People prefer to integrate two positive outcomes
c) People prefer to integrate a large negative outcome with a small positive outcome
d) People prefer to segregate two negative outcomes
economic man is that he is rational. This means two things:” Which two things are needed,
according to Edwards, to be rational?
a. Complete information and infinite sensitivity.
b. Weak ordering of states that he can get and infinite sensitivity.
c. Complete information and maximization.
d. Weak ordering of states that he can get and maximization.
1) In the lectures, we described the assumptions in economics. According to these
assumptions, people should...
a. use feeling-is-for-doing, have stable preference, and have complete information.
b. be self-interested, have a short-term perspective, and have no cognitive limitations.
c. have unlimited will-power, have complete information, and be self-interested.
d. maximize, be fair, and have stable preferences.
2) How does one calculate Expected Value?
a) probability of an outcome ✕ value of that outcome
b) probability of an outcome ✕ subjective value of that outcome
c) Subjective probability of an outcome ✕ value of that outcome
d) Subjective probability of an outcome ✕ subjective value of that outcome
3) The St. Petersburg Paradox showed the limitations of a decision theory. Which one?
a) Game Theory
b) Expected Value Theory
c) Prospect Theory
d) Expected Utility Theory
4) In people’s responses to Kahneman and Tversky’s (1984; Choices, Values and Frames)
Asian Disease problem, an important assumption of the theory of rational choice is violated.
Which one?
a) Stable preferences
b) Self-interest
c) Rational discounting of the future
d) Maximization
5) The reflection-effect is explained in Prospect Theory by?
a) Loss aversion
b) The shape of the probability weighting function
c) The curvature of the probability weighting function
d) The shape of the value-function
6) What is true with respect to hedonic editing in mental accounting?
a) People prefer to integrate two negative outcomes
b) People prefer to integrate two positive outcomes
c) People prefer to integrate a large negative outcome with a small positive outcome
d) People prefer to segregate two negative outcomes
