Behavioral Economics Chapter 1: Standard Model and Behavioral Economics
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Questions and Answers

What is the standard economic model based on?

  • Assumption of cognitive bias
  • Assumption of bounded rationality
  • Assumption of rational and selfish behavior (correct)
  • Assumption of irrational and social preferences

    • What is 'Homo-economicus' in the standard economic model?

  • An actor who is rational and selfish (correct)
  • An actor who is cognitively biased
  • An actor who uses simple heuristics
  • An actor who has bounded rationality

    • What does 'bounded rationality' take into account?

  • Irrational decision-making
  • Social preferences
  • Limited computational capabilities (correct)
  • Unlimited computational capabilities

    • What do heuristics represent in decision-making?

    <p>Simple rules of thumb</p> Signup and view all the answers

    What does cognitive bias result from?

    <p>Using simple heuristics</p> Signup and view all the answers

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