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Questions and Answers
Which of these characteristics should a good rule of thumb have? (Select all that apply)
Which of these characteristics should a good rule of thumb have? (Select all that apply)
A choice architecture alters people's behavior in a predictable way, but also significantly changes their economic incentives.
A choice architecture alters people's behavior in a predictable way, but also significantly changes their economic incentives.
False
Which of the following is NOT a type of nudge within choice architecture?
Which of the following is NOT a type of nudge within choice architecture?
Standard economics models are based on the assumption of rational self-interest.
Standard economics models are based on the assumption of rational self-interest.
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What is the primary goal of a producer in standard economic models?
What is the primary goal of a producer in standard economic models?
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Study Notes
Nudge Theory
- Nudge - a method designed to influence consumer's choices in a predictable way, without offering financial incentives or imposing sanctions, and without limiting choice.
- Choice architecture - any aspect of the choice environment in a predictable way without forbidding any options that alters people for bidding their economic incentives.
- Different types of nudges within choice architecture:
- Default choice - results from doing nothing.
- Restricted choice - limited by the government.
- Mandated choice - a free choice, but it is compulsory to make.
Critique of the maximising behaviour of consumers and producers
- Standard economics models are based on the assumption of rational 'self-interest'.
- Consumers want to maximise their satisfaction.
- Producers want to maximise their profits.
- Investors want the highest possible ROI*.
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