Multiple Choice Quiz

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1		Economic theory pays too little attention to
			A)	sense making.
			B)	consistency.
			C)	rational choice.
			D)	the autonomous.
2		The tendency in human decision making is to put too much emphasis on
			A)	the distant future.
			B)	success.
			C)	consistency.
			D)	large distance.
3		Which of the following is not an example of the costs of bounded rationality?
			A)	Organizational adaptations.
			B)	Non-productive use of resources (time, energy).
			C)	Bad / suboptimal decisions.
			D)	Ambiguity.
4		Which of the following is not a measure an organization can take in order to deal with the costs of bounded rationality?
			A)	Changing the choice possibilities.
			B)	Structuring the amount and nature of information.
			C)	Eliminating waste.
			D)	Changing the costs and / or benefits of the choice possibilities.
5		The law of small numbers states that
			A)	new information receives too much weight.
			B)	humans have difficulties with the representativeness of samples.
			C)	you should immediately quit playing in a casino when you have made a large gain.
			D)	humans pay too much attention to small losses.
6		An information cascade means that
			A)	choices of a few early individuals determine the choices of all successors.
			B)	there is often an overflow of information.
			C)	bad news keeps pouring in once some bad news has arrived.
			D)	people are not good at Bayesian updating.
7		The most important point of prospect theory is
			A)	that it provides an alternative to expected utility theory.
			B)	that the law of diminishing marginal utility applies to gains as well as losses.
			C)	that it captures the law of small numbers.
			D)	the asymmetry between gains and losses.
8		Empirical research regarding prospect theory indicates that
			A)	losses count twice as heavy as gains.
			B)	males are less loss averse than females.
			C)	prospects are important.
			D)	loss aversion is important only when the amount of money involved is small.
9		Loss aversion entails
			A)	bounded rationality.
			B)	risk.
			C)	a reference point.
			D)	conflicting interests.
10		It may be attractive from a loss aversion perspective to
			A)	pay less attention to losses.
			B)	reduce the frequency of evaluations.
			C)	increase the attractiveness of success.
			D)	emphasize more consistency.