Thinking MCQ
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- 1.
There are three types of theory to describe decision making, which of these is not one of them?
- A.
Informative
- B.
Descriptive
- C.
Prescriptive
- D.
Normative
Correct Answer
A. InformativeExplanation
The question asks for a type of theory that is not one of the three types used to describe decision making. The three types mentioned are descriptive, prescriptive, and normative. The correct answer, informative, does not fit into any of these categories. Therefore, informative is not one of the types of theory used to describe decision making.Rate this question:
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- 2.
A Rational decision is:
- A.
All of these
- B.
To maximise utility
- C.
Subjective
- D.
Normative
Correct Answer
A. All of theseExplanation
A rational decision is one that takes into account all available information and options, weighs the potential outcomes and consequences, and aims to maximize utility or benefit. It considers subjective factors such as personal preferences, values, and beliefs, as well as objective factors such as facts and evidence. Additionally, rational decisions can be normative, meaning they are based on societal norms, standards, or expectations. Therefore, the correct answer is that a rational decision encompasses all of these aspects.Rate this question:
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- 3.
Todd and Gigerenzer (2000) had 4 separate visions of rational thinking, which of these is not one of them?
- A.
Bounded rationality
- B.
Optimization under constraints
- C.
Satisficing
- D.
Fast and Frugal heuristics
Correct Answer
A. Bounded rationalityExplanation
The final one is unbounded rationality - decisions always meet normative expectationRate this question:
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- 4.
If rational decision making has cognitive architecture but the environment/ lack of information means we do not always meet normative rationality - what is the appropriate description?
- A.
Optimization under constraints
- B.
Unbounded rationality
- C.
Satisficing
- D.
Fast and frugal heuristics
Correct Answer
A. Optimization under constraintsExplanation
The appropriate description in this case is "Optimization under constraints." This is because the statement mentions that rational decision making has cognitive architecture, but external factors like the environment or lack of information can prevent us from always achieving normative rationality. Optimization under constraints refers to making the best possible decision given the limitations or constraints imposed by the situation. It implies that we strive to make rational decisions within the boundaries set by the external factors.Rate this question:
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- 5.
If we believe that the cognitive architecture is not rationally functioning and decision making has evolved to fit specific function we believe in what?
- A.
Fast and frugal heuristics
- B.
Satisficing rationality
- C.
Optimization under constraints
- D.
Unbounded rationality
Correct Answer
A. Fast and frugal heuristicsExplanation
The correct answer is Fast and frugal heuristics. This is because fast and frugal heuristics refer to the idea that decision-making processes are not necessarily rational or optimal, but rather have evolved to be quick and efficient in specific situations. This perspective suggests that humans use simple rules of thumb or heuristics to make decisions, rather than engaging in complex optimization or unbounded rationality.Rate this question:
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- 6.
Rational Choice theory is ...
- A.
All of these
- B.
Social physics
- C.
The search for mathematical laws to explain social and economic phenomena
- D.
About 50 years old in its modern form
Correct Answer
A. All of theseExplanation
Rational Choice theory encompasses all the options mentioned in the question. It is a social science theory that applies mathematical principles to explain social and economic phenomena. It can be considered a form of social physics as it aims to understand and predict human behavior in a systematic manner. Additionally, Rational Choice theory has been around for approximately 50 years in its modern form. Therefore, all of the options are correct explanations for Rational Choice theory.Rate this question:
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- 7.
If option A is £100 with 50% probability and option B is £1000 with 2% probability, which has the highest utility?
- A.
Option A - £50
- B.
Option A - £200
- C.
Option B - £200
- D.
Option B - £20
Correct Answer
A. Option A - £50Explanation
Option A has the highest utility because it has a higher probability of occurring (50% compared to 2%) and the amount of money involved is the same (£100). Therefore, the expected value of option A is higher, making it the more desirable choice.Rate this question:
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- 8.
Pascal's wager has what conclusion about believing in God?
- A.
We should believe as it has the highest expected utility if true
- B.
We should believe as it has the highest guaranteed utility if true
- C.
We should not believe, as a secular life has the highest expected utility
- D.
We should not believe, as a secular life has the highest guaranteed utility
Correct Answer
A. We should believe as it has the highest expected utility if trueExplanation
Pascal's wager suggests that we should believe in God because it offers the highest expected utility if true. In other words, by believing in God, we have the potential to gain infinite happiness (eternal salvation) if God exists, while the potential loss (living a secular life) is finite. Therefore, the expected utility of believing in God is higher than not believing, as the potential reward outweighs the potential loss.Rate this question:
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- 9.
Expected Utility Theory is ...
- A.
A normative theory
- B.
A descriptive theory
- C.
A prescriptive theory
- D.
It is none of these theories
Correct Answer
A. A normative theoryExplanation
Expected Utility Theory is a normative theory because it focuses on how rational individuals should make decisions under conditions of uncertainty. It provides a framework for evaluating and comparing different courses of action based on their expected outcomes and the individual's preferences. Normative theories prescribe what individuals ought to do, rather than describing what they actually do or predicting their behavior. Therefore, Expected Utility Theory falls under the category of normative theories.Rate this question:
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- 10.
Expected utility has 3 choice axioms (things that are always true) for it to exist as a theory, which of the following is incorrect?
- A.
Normative reasoning - people should always follow the highest utility
- B.
Transitivity - (x>y, y>z ... x>z)
- C.
The Sure-thing principle - if an outcome is guaranteed, it has no influence on our choice
- D.
Weak ordering - we must always be able to compare to utilities even if they are equal
Correct Answer
A. Normative reasoning - people should always follow the highest utilityExplanation
Normative reasoning refers to the idea that people should always follow the highest utility. However, this statement is incorrect. Expected utility theory does not prescribe that individuals should always choose the option with the highest utility. Instead, it suggests that individuals should choose the option that maximizes their expected utility, taking into account both the probabilities of different outcomes and the utilities associated with those outcomes. In other words, individuals should consider the trade-off between the likelihood of different outcomes and the value they assign to those outcomes when making decisions.Rate this question:
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- 11.
The St. Petersburg Paradox states that the expected value of the gamble in question was infinite yet people would sell the chance to play for a much smaller amount, how can this be explained?
- A.
The utility of wealth is proportional to its logarithm of the amount
- B.
The utility of wealth is linear to the amount
- C.
The low probability of winning the gamble altered the expected value
- D.
Expected value = Expected Utility
Correct Answer
A. The utility of wealth is proportional to its logarithm of the amountExplanation
The extra utility from the gamble is no longer enough to compensate for the high winnings - an infinite expected value win with very low probability does not have an infinite expected utilityRate this question:
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- 12.
There are 3 violations to the normative theory - Expected Utility theory, which of these is not one of them?
- A.
The Monty Hall problem
- B.
The Allais Paradox
- C.
Risk seeking vs Risk averse behaviour
- D.
Non integration of prospects with existing assets
Correct Answer
A. The Monty Hall problemExplanation
The Monty Hall problem is not a violation of the normative theory - Expected Utility theory. The Monty Hall problem is a probability puzzle that demonstrates the concept of conditional probability and the benefits of switching choices. It does not directly contradict the principles of Expected Utility theory, which focuses on decision-making under uncertainty based on expected values and utility maximization.Rate this question:
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- 13.
The Allais paradox shows that people break which axiom of expected utility theory?
- A.
Sure-thing principle
- B.
Transitivity
- C.
Weak Ordering
- D.
Normality
Correct Answer
A. Sure-thing principleExplanation
They take into account a guaranteed gain when it should be discounted from the equation, meaning P's do not choose the highest expected utilityRate this question:
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- 14.
If a participant is given £1000 and has to then choose between option A - £1000 at 0.5 or option B - £500 at 1.0, what are the expected utilities and the rational choice?
- A.
Option B - £1500
- B.
Option A - £1000
- C.
Option B - £500
- D.
They have the same expected utility so they are equal
Correct Answer
A. Option B - £1500Explanation
We have to integrate existing assets into decisions, something people often fail to doRate this question:
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- 15.
The Ultimatum game suggests that the person receiving the money should always do what?
- A.
Accept any offer
- B.
Reject any offer
- C.
Reject any offer below 50%
- D.
Reject any offer below 25%
Correct Answer
A. Accept any offerExplanation
To maximise their utility they should accept anything, but most people do offer 40-50% and offers below 20% are often rejectedRate this question:
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- 16.
According to Rational Choice Theory, what should participants do during the Dictator game?
- A.
Pocket the money and refuse to play
- B.
Offer half out of fear of altruistic punishment
- C.
Offer the smallest amount possible (about 0.1%)
- D.
Offer 10% and keep 90%
Correct Answer
A. Pocket the money and refuse to playExplanation
When suggested that a 50:50 split should occur, 76% of P's agreed to it. Those that knew the player they were with had previously not behaved altruistically were more likely to pocket the money as a form of altruistic punishmentRate this question:
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- 17.
The outcome that benefits both players in the Prisoner's dilemma is:
- A.
Both cooperate
- B.
Both defect
- C.
You defect, they cooperate
- D.
You cooperate, they defect
Correct Answer
A. Both cooperateExplanation
However this is not the rational choice in a single instance since we should defectRate this question:
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- 18.
Which of these is plausible to explain why people rarely behave according to rational choice theory in social dillemas?
- A.
All of these
- B.
Empathy
- C.
Fairness
- D.
Greed
Correct Answer
A. All of theseExplanation
Envy also lead to defection to prevent others from doing better than themRate this question:
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- 19.
Dawes et al (1986) gave S's a voucher for £5 and said that if enough people donated to a pool then everyone would receive a £10 bonus, but if enough was not donated then the people that had donated would lose that money, which of the following conditions increased people's altruism?
- A.
Neither of these
- B.
Both of these
- C.
Money-back guarentee - the £5 would be given back if not enough
- D.
Enforced-contribution - if the pool was filled, anyone who did not contribute would lose their money
Correct Answer
A. Neither of theseExplanation
This proved GREED to be a basis for defectionRate this question:
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- 20.
Iterative Prisoner's dilemma creates a new problem since the rational choice for a single game to defect no longer the clear rational choice, mutual cooperation benefits both players, what is the name for this problem?
- A.
The problem of Suboptimization
- B.
The problem of Mutual Cooperation
- C.
The problem of Irrational Rationality
- D.
The problem of Iterative Irrationality
Correct Answer
A. The problem of SuboptimizationExplanation
The correct answer is the problem of Suboptimization. In an iterative Prisoner's dilemma, where multiple games are played, the rational choice for a single game to defect may not be the best choice in the long run. Mutual cooperation can lead to better outcomes for both players. This creates a problem of suboptimization, where choosing the rational option in each game does not result in the overall optimal outcome.Rate this question:
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- 21.
Axelrod and Hamilton (1981) set up a competition to find the winning strategy for the iterative Prisoners Dilemma, which strategy was the winner?
- A.
Tit for Tat
- B.
Free Rider
- C.
Always Cooperate
- D.
Suspicious Tit for Tat
Correct Answer
A. Tit for TatExplanation
Cooperate first move and then matches opponents last move each time.Rate this question:
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- 22.
Which of these is not a key feature of Tit for Tat that makes it a successful strategy?
- A.
Suspicious - Will lead with defection
- B.
Transparent - Clear what the next move will be
- C.
Provocable - Will punish defection
- D.
Forgiving - Will reward cooperation
Correct Answer
A. Suspicious - Will lead with defectionExplanation
Tit for Tat is a successful strategy because it is transparent, provable, and forgiving. However, being suspicious and leading with defection is not a key feature of Tit for Tat. This strategy is based on the principle of reciprocating the opponent's previous move, starting with cooperation. Hence, the answer is "Suspicious - Will lead with defection".Rate this question:
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- 23.
Commons dilemmas are social dilemmas in which non-cooperation will destroy a resource, which of the following is not a good strategy to ensure the survival of altruism + cooperation?
- A.
Use incentives
- B.
Make sure everyone shares social values
- C.
Ensure communication
- D.
Create a shared group identity
Correct Answer
A. Use incentivesExplanation
This is a short term fix and not a change in attitude just a momentary change in behaviour and still very self servingRate this question:
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- 24.
Free riders are a problem to every cooperating group, which of these is not a counter strategy that has evolved to counter this?
- A.
Gated communities
- B.
Kin altruism
- C.
Information exchange to limit free-riders
- D.
Dowry payments
Correct Answer
A. Gated communitiesExplanation
Gated communities are not a counter strategy that has evolved to counter free riders. Gated communities are residential areas that are enclosed by walls or fences, typically with restricted access. While they may provide a sense of security and exclusivity for the residents, they do not directly address the issue of free riders within a cooperating group. Counter strategies such as kin altruism, information exchange to limit free riders, and dowry payments are more relevant in addressing the problem of free riders within a group.Rate this question:
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- 25.
Deciding that all out war between two countries is less likely than all out war between two countries being caused by a third smaller country is an example of what?
- A.
The representativeness heuristic
- B.
The availability heuristic
- C.
Anchoring and Adjustment
- D.
Hindsight bias
Correct Answer
A. The representativeness heuristicExplanation
This is the Conjunction fallacy and occurs because specific events seem more likely than general ones - hence the representativeness heuristicRate this question:
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- 26.
If a sample of 50 children is taken for an IQ score and the first child to be tested has an IQ of 150, what will the IQ for the whole sample be?
- A.
101
- B.
150
- C.
100
- D.
99
Correct Answer
A. 101Explanation
This is the Law of small numbers - assuming probabilities balance out in small populations when in fact the larger the population the closer it will be to the average of the population
This also leads to the gambers fallacy - in which people blame a run of unsuccessful outcomes on bad luck not accepting everything is independentRate this question:
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- 27.
People falling for the gambler's fallacy are more likely to do so when ... ?
- A.
A sequence has more alternations/ transition numbers
- B.
A sequence is shorter
- C.
They believe the trials are independent
- D.
They treat a sample mean as a population mean
Correct Answer
A. A sequence has more alternations/ transition numbersExplanation
People falling for the gambler's fallacy are more likely to do so when a sequence has more alternations/transition numbers. The gambler's fallacy is the belief that if an event has not occurred for a while, it is more likely to happen in the future. When a sequence has more alternations or transition numbers, it creates a pattern that individuals may interpret as a deviation from randomness. This can lead them to believe that the outcome will revert to the opposite pattern, even though each trial is independent and the previous outcomes do not affect the future ones.Rate this question:
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- 28.
The availability heuristic is NOT ...
- A.
Influenced by the underlying probabilities
- B.
Influenced by information stored in memory
- C.
Influenced by imagination
- D.
Subject to hindsight bias
Correct Answer
A. Influenced by the underlying probabilitiesExplanation
The availability heuristic is a mental shortcut where people make judgments based on the ease with which examples come to mind. It is not influenced by the underlying probabilities because it relies on the ease of recalling relevant information rather than the actual likelihood of an event occurring. This means that even if an event has a low probability, if it is easily recalled or available in one's memory, it may be perceived as more likely.Rate this question:
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- 29.
If the value of a random number generator has a subsequent effect on a later estimate you make about another question, what is this heuristic called?
- A.
Anchoring and adjustment
- B.
Availability
- C.
Representativeness
- D.
Small numbers
Correct Answer
A. Anchoring and adjustmentExplanation
Anchoring and adjustment is the correct answer because it refers to the cognitive bias where an initial piece of information (the anchor) influences subsequent judgments or estimates. In this case, the value of the random number generator serves as the anchor and affects the later estimate made about another question. The individual may adjust their estimate based on the initial anchor, leading to biased judgments.Rate this question:
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- 30.
Kahneman and Tversky's Asian disease problem saw people behave risk averse and risk seeking on the same question due to what effect?
- A.
Message framing
- B.
Hindsight bias
- C.
Probability adjustment
- D.
The law of small numbers
Correct Answer
A. Message framingExplanation
The correct answer is message framing. Message framing refers to how information is presented or framed, which can influence people's decision-making and risk preferences. In the Asian disease problem, Kahneman and Tversky found that when the problem was framed in terms of lives saved, people tended to be risk averse and chose the safer option. However, when the problem was framed in terms of lives lost, people tended to be risk-seeking and chose the riskier option. This demonstrates how the framing of information can significantly impact people's risk preferences and decision-making.Rate this question:
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- 31.
Prospect theory is a .... theory?
- A.
Descriptive
- B.
Prescriptive
- C.
Normative
- D.
Informative
Correct Answer
A. DescriptiveExplanation
It is a theory to explain the systematic biases in the system that are seen through the heuristics we deployRate this question:
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- 32.
The Pi function of Prospect theory creates what problem?
- A.
Large probabilities are underweighted and Small probabilities are overweighted
- B.
Large probabilities are overweighted and small probabilities are underweighted
- C.
It cannot provide an answer to the Allais paradox
- D.
It cannot explain framing effects
Correct Answer
A. Large probabilities are underweighted and Small probabilities are overweightedExplanation
The Pi function of Prospect theory creates the problem of underweighting large probabilities and overweighting small probabilities. This means that individuals tend to underestimate the likelihood of events with high probabilities and overestimate the likelihood of events with low probabilities. This bias can lead to irrational decision-making and risk-taking behavior.Rate this question:
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- 33.
Which of the following is correct about Prospect theory functions?
- A.
Value = explains utility in that it is asymmetrical and losses loom larger than gains
- B.
Pie = explains utility in that it is asymmetrical and losses loom larger than gains
- C.
Pie = a representation of objective probability
- D.
Value = a representation of objective probability
Correct Answer
A. Value = explains utility in that it is asymmetrical and losses loom larger than gainsExplanation
The pie function distorts objective probability and makes a subjective pie value - hence meaning 1.0 probabilities receive heavier weight in a certainty effectRate this question:
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- 34.
Which of the following is true?
- A.
Confidence often exceeds accuracy in experts
- B.
Confidence in a probability judgement predicts accuracy
- C.
Accuracy often exceeds confidence in experts
- D.
Confidence judgements of a risk always depend on the probabilities
Correct Answer
A. Confidence often exceeds accuracy in expertsExplanation
Experts tend to have high levels of confidence in their judgments, even when their accuracy may be questionable. This is because experts have deep knowledge and experience in their field, which can lead them to feel overly confident in their abilities. However, research has shown that confidence does not always correlate with accuracy. In fact, experts may overestimate their accuracy, leading to a discrepancy between their confidence and actual performance.Rate this question:
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- 35.
What does Regret theory consider that neither Rational Choice or Prospect do?
- A.
Alternative outcomes
- B.
Bayesian probabilities
- C.
Frequencies
- D.
The impact of memory
Correct Answer
A. Alternative outcomesExplanation
Regret theory = compare alternative outcomes after decision to rejoice or regret dependent on the other outcomesRate this question:
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- 36.
In regret theory, what contaminates our subjective estimates of utility, bending the value function?
- A.
Anticipated emotional states
- B.
Incorrect probability estimates
- C.
Past memories
- D.
All of these
Correct Answer
A. Anticipated emotional statesExplanation
In regret theory, our subjective estimates of utility are contaminated by anticipated emotional states. This means that our expectations of how we will feel about the outcomes of our choices can influence our perception of the value or desirability of those outcomes. These anticipated emotions can bend or distort the value function, leading us to make decisions based on avoiding regret or seeking certain emotional states rather than purely rational considerations.Rate this question:
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- 37.
Marylyn Vos Savant's reply to the Monty Hall problem caused controvosy because she suggested what was true?
- A.
Switch was the best option as it gave a 2/3 chance of winning
- B.
Stick is the best option as it gives as 2/3 chance of winning
- C.
Stick is the best option as it is a 1/2 chance of winning and avoids regret theory effects
- D.
There is no best option and it depends on the subjective utility of the prizes as to the rational decision
Correct Answer
A. Switch was the best option as it gave a 2/3 chance of winningExplanation
Marylyn Vos Savant's reply to the Monty Hall problem caused controversy because she suggested that switching doors was the best option, as it gave a 2/3 chance of winning. This contradicted many people's intuition, as they believed that sticking with their initial choice would give them a 1/2 chance of winning. The controversy arose because the correct answer goes against common intuition and requires understanding the underlying probability theory.Rate this question:
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- 38.
If the Monty Hall problem was played on successive occasions then what would be the expected outcome of the participant's choices if we possess normative processes?
- A.
They would gradually learn to switch
- B.
They would exclusively switch
- C.
They would always stick, avoiding the regret
- D.
They would maintain the original strategy they adopted at the beginning, repeating the game would have no effect without additional steps to teach people new strategies
Correct Answer
A. They would gradually learn to switchExplanation
If the Monty Hall problem was played on successive occasions and the participants possess normative processes, it is expected that they would gradually learn to switch their choices. This is because as they play the game repeatedly, they would start to recognize the advantage of switching doors. Through trial and error, they would realize that switching increases their chances of winning. Therefore, over time, they would develop the tendency to switch their initial choice in order to maximize their chances of winning the game.Rate this question:
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- 39.
Friedman (1998) conducted a repetitive Monty Hall dilemma but with 4 treatments which all lead to a steady learning effect to switch, which of the following is not one of those treatments?
- A.
The conditioning group - larger booby prize
- B.
The Incentive group - larger financial reward
- C.
The track record group - saw a history of their choices and outcomes
- D.
The advice group - had it explained why switching was best
Correct Answer
A. The conditioning group - larger booby prizeExplanation
These treatments all worked to increase the % switch but never to 100%, the final group was the Compare group where they could see data from a number of participantsRate this question:
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- 40.
Friedman predicts that if we possess cognitive architecture to be rational then every choice anomaly will be greatly diminished with appropriate structured learning environments, however there are bandit problems in which people consistently fail to maximize expected utility, which of these is not one of them?
- A.
The Allais Paradox
- B.
Social dilemmas such as the Tragedy of the commons
- C.
Probability matching
- D.
Melioration
Correct Answer
A. The Allais ParadoxExplanation
The Allais Paradox is not one of the bandit problems in which people consistently fail to maximize expected utility.Rate this question:
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- 41.
If a blue light turns on 70% of the time and a yellow light turns on 30% of the time and a P is asked to guess which light will turn on, what is the proportional correct responses that the rational decision will provide?
- A.
70%
- B.
50%
- C.
58%
- D.
100%
Correct Answer
A. 70%Explanation
Rational choice is to always pick the blue light but people insist on PROBABILITY MATCHING and still guess the yellow light 30% of the timeRate this question:
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- 42.
Which of the following has been shown to disappear under appropriately structured learning environments?
- A.
Both of these
- B.
Probability Matching
- C.
Melioration
- D.
Neither of these
Correct Answer
A. Both of theseExplanation
Both probability matching and melioration have been shown to disappear under appropriately structured learning environments. This means that when the learning environment is designed in a certain way, individuals tend to stop engaging in these behaviors. Probability matching refers to the tendency to match responses to the probability of reinforcement, while melioration refers to the tendency to allocate behavior in proportion to the rate of reinforcement obtained from different options. Under appropriate learning conditions, individuals are likely to adopt more optimal decision-making strategies and abandon these less efficient behaviors.Rate this question:
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- 43.
Why do people prefer £500 now rather than £1000 in ten years?
- A.
All of these
- B.
Hyperbolic discount rates
- C.
Uncertainty of the future
- D.
Temporal Proximity causes disproportional increase in attractiveness of the option
Correct Answer
A. All of theseExplanation
People prefer £500 now rather than £1000 in ten years because of a combination of factors. Firstly, hyperbolic discount rates play a role, meaning that people tend to value immediate rewards more than future rewards. Secondly, there is uncertainty about the future, and people may not be confident that they will actually receive the £1000 in ten years. Lastly, temporal proximity causes a disproportional increase in the attractiveness of the £500 option, as it is a more immediate and tangible reward compared to waiting for ten years.Rate this question:
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- 44.
What did Zieger and Tunney (2012) find concerning relatedness and discount rate?
- A.
Discount rate reduced with relatedness
- B.
Discount rate increased with relatedness
- C.
Discount rate was unrelated to relatedness
- D.
Strangers made more impulsive decisions as they knew the participant least
Correct Answer
A. Discount rate reduced with relatednessExplanation
Decisions made by strangers are the least impulsive and have our best interests in hearts because they lack the temporal and physical impulsivity of getting the money nowRate this question:
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- 45.
What is another name for the tendency to continue and endeavor once an investment has been made?
- A.
Sunk costs
- B.
Inter-temporal choice
- C.
Conflict monitoring
- D.
Hyperbolic discounting
Correct Answer
A. Sunk costsExplanation
A fallacy of temporal decision makingRate this question:
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- 46.
Someone who savours delayed gratification in the knowledge the reward will be greater is said to have ... ?
- A.
A low discount rate (k)
- B.
A high discount rate (k)
- C.
A high subjective value (V)
- D.
A low subjective value (V)
Correct Answer
A. A low discount rate (k)Explanation
Someone who savours delayed gratification in the knowledge the reward will be greater is said to have a low discount rate (k). This means that they place a lower value on immediate rewards and are willing to wait for a larger reward in the future. They have the ability to delay instant gratification and prioritize long-term benefits, indicating a lower discount rate.Rate this question:
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- 47.
Sunk Costs are a fallacy since people persist even when the current investment is now operating at a lost even when it is completed, what is an explanation for why people persist?
- A.
Both of these are appropriate explanations
- B.
Investments are treated as losses and are to be avoided or recouped (Prospect Theory)
- C.
We must avoid waste as a simple heuristic
- D.
Both these explanations are massively flawed
Correct Answer
A. Both of these are appropriate explanationsExplanation
Both of these explanations are appropriate because they provide valid reasons for why people persist even when the current investment is operating at a loss. The first explanation suggests that people may view the investment as a loss and want to avoid further losses or try to recoup their initial investment, which aligns with Prospect Theory. The second explanation proposes that people may persist due to a simple heuristic of avoiding waste, as they may feel that abandoning the investment would result in wasted resources. Both of these explanations offer plausible motivations for why people would continue despite the sunk costs.Rate this question:
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- 48.
Dual process theory suggests we have 2 systems, which of the following is incorrect of system 1 responses?
- A.
Deliberative
- B.
Heuristic
- C.
Fast
- D.
Most commonly used
Correct Answer
A. DeliberativeExplanation
Its automatic, visceral and associativeRate this question:
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- 49.
Dual process theory suggests we have 2 systems to make decisions, which of the following is incorrect about system 2?
- A.
Visceral
- B.
Monitors system 1
- C.
Analytical
- D.
Slow and explicit
Correct Answer
A. VisceralExplanation
It is deliberative, cold and rule based and rarely usedRate this question:
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- 50.
Neys and Glumeric (2008) Conflict monitoring put the dual system in conflict and showed what?
- A.
Incongruent conditions had very low accuracy as people relied on the representativeness heuristic incorrectly
- B.
Congruent conditions had very low accuracy as people relied on the representativeness heuristic incorrectly
- C.
Participants benefited from the representativeness heuristic in the incongruent condition
- D.
Incongruent conditions saw people more readily take up the base rate probabilities
Correct Answer
A. Incongruent conditions had very low accuracy as people relied on the representativeness heuristic incorrectlyExplanation
The incongurent condition saw only those that used the base rate probabilities score correctly while the congruent condition saw those using the representativeness heuristic also benefitRate this question:
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Jan 03, 2017Quiz Created by
Matt
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