Podcast
Questions and Answers
Which of the following scenarios best illustrates the concept of 'loss aversion'?
Which of the following scenarios best illustrates the concept of 'loss aversion'?
- Quickly selling a stock after a small gain to avoid potential future losses.
- Consistently choosing the option with the highest expected value regardless of potential gains or losses.
- Preferring a guaranteed \$50 gain over a 50% chance to win \$100, but also preferring a 50% chance to lose \$100 over a guaranteed \$50 loss. (correct)
- Investing in a high-risk stock with the potential for substantial gains despite the possibility of significant losses.
How does framing a decision as either a potential gain or a potential loss affect an individual's choice, according to prospect theory?
How does framing a decision as either a potential gain or a potential loss affect an individual's choice, according to prospect theory?
- Individuals are more likely to take risks when a decision is framed as avoiding a loss, and less likely to take risks when framed as achieving a gain. (correct)
- Individuals are less likely to take risks when a decision is framed as avoiding a loss, and more likely to take risks when framed as achieving a gain.
- Framing has no impact on decision-making; individuals consistently choose the option with the highest expected value.
- Framing only affects decisions involving large sums of money; small decisions are unaffected.
Which cognitive bias leads individuals to overestimate the likelihood of events that are readily available in their memory, often due to recent or vivid occurrences?
Which cognitive bias leads individuals to overestimate the likelihood of events that are readily available in their memory, often due to recent or vivid occurrences?
- Anchoring bias
- Availability heuristic (correct)
- Confirmation bias
- Hindsight bias
In the context of behavioral economics, what does 'anchoring bias' refer to?
In the context of behavioral economics, what does 'anchoring bias' refer to?
Which bias describes the tendency to selectively search for and interpret information that confirms one's own beliefs?
Which bias describes the tendency to selectively search for and interpret information that confirms one's own beliefs?
What is 'hindsight bias,' and how does it affect decision-making?
What is 'hindsight bias,' and how does it affect decision-making?
How does the 'representativeness heuristic' influence judgment under uncertainty?
How does the 'representativeness heuristic' influence judgment under uncertainty?
Which scenario exemplifies the 'status quo bias' in decision-making?
Which scenario exemplifies the 'status quo bias' in decision-making?
What is the primary implication of understanding cognitive biases and heuristics for financial decision-making?
What is the primary implication of understanding cognitive biases and heuristics for financial decision-making?
How can the principles of behavioral economics be applied to improve public policy and encourage socially desirable behaviors?
How can the principles of behavioral economics be applied to improve public policy and encourage socially desirable behaviors?
Flashcards
Computer Virus
Computer Virus
A program designed to replicate itself and spread to other computers, often without the user's consent or knowledge.
Malware
Malware
Software that is intended to damage or disable computers and computer systems.
Ransomware
Ransomware
A type of malware that encrypts a victim's files, which the attacker then demands a ransom from the victim to restore access to the data.
Trojan Horse
Trojan Horse
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Phishing
Phishing
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Denial-of-Service (DoS) Attack
Denial-of-Service (DoS) Attack
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Distributed Denial-of-Service (DDoS) Attack
Distributed Denial-of-Service (DDoS) Attack
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Botnet
Botnet
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Penetration Testing
Penetration Testing
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