Chapter 25. Behavioral Economist Examines Interplay of Money, Morality and Rationality

25.1

According to economist Dan Ariely, which are examples of “irrational” behavior?

Subprime loans and large mortgages

Overextended consumer credit and large mortgages

Stock purchases and large mortgages

Overextended consumer credit and stock purchases

When prices exceed what is considered rational, this is often referred to as:

a sunspot

a bubble

a double rainbow

a black swan

Repeated investment behavior by professionals is expected to ____; in reality ____.

reduce irrationality; professional behavior reduces irrationality, while repeated behavior has no effect

reduce irrationality; neither reduces irrationality

increase irrationality; both reduce irrationality

reduce irrationality; only repeated behavior reduces irrationality

According to Dan Ariely, the recent financial crisis was a crisis of ____; this could be alleviated by ____.

trust; revenge

confidence; trust

trust; cooperation

confidence; cooperation

In Dan Ariely’s experiment, _____ were stolen from the refrigerator less than ____ were.

dollar bills; bottles of Coca-Cola

bottles of Coca-Cola; dollar bills

bottles of Coca-Cola; bottles of Pepsi

bottles of Pepsi; bottles of Coca-Cola

According to Dan Ariely, increased distance from money:

increases immoral behavior because people are more likely to feel immoral.

increases immoral behavior because people are less likely to feel immoral.

decreases immoral behavior because people are less likely to feel immoral.

decreases immoral behavior because people are More likely to feel immoral.