[{"data":1,"prerenderedAt":1805},["ShallowReactive",2],{"i-kinnu:logo":3,"i-kinnu:origami-folding":8,"pathway-science-behavioral-economics":12,"i-lucide:chevron-right":1800,"i-lucide:tag":1803},{"left":4,"top":4,"width":5,"height":5,"rotate":4,"vFlip":6,"hFlip":6,"body":7},0,27,false,"\u003Cg fill=\"none\">\u003Cpath d=\"M0.046875 1.05555C0.046875 1.03541 0.048197 1.01579 0.0507438 0.996728C0.0987149 0.438619 0.586845 0 1.18194 0H25.4398C26.451 0 26.9575 1.171 26.2424 1.85585L15.7301 11.9243L1.31574 0.903476C1.17475 0.79568 1.01137 0.761884 0.859586 0.784111L26.2936 25.1441C27.0086 25.829 26.5022 27 25.4909 27H1.18194C0.555061 27 0.046875 26.5133 0.046875 25.9129V1.05555Z\" fill=\"currentColor\"/>\u003C/g>",{"left":4,"top":4,"width":9,"height":10,"rotate":4,"vFlip":6,"hFlip":6,"body":11},1000,236,"\u003Cg fill=\"none\">\u003Cpath fill-rule=\"evenodd\" clip-rule=\"evenodd\"\n    d=\"M193.68 38.2238C195.994 38.2238 197.87 40.0989 197.87 42.412V231.812C197.87 234.125 195.994 236 193.68 236H4.19013C1.87603 236 2.02305e-07 234.125 0 231.812V42.412C-2.02305e-07 40.0989 1.87603 38.2238 4.19013 38.2238H193.68ZM111.76 89.0072C111.685 87.9474 110.572 87.2905 109.608 87.7376L96.8872 93.641C95.7786 94.1554 95.702 95.7016 96.7545 96.3225L101.579 99.167C94.7045 109.365 90.5733 122.892 90.5732 137.642C90.5733 154.323 95.8569 169.439 104.416 179.945C105.301 181.032 106.9 181.196 107.987 180.311C109.075 179.426 109.238 177.828 108.353 176.741C100.621 167.25 95.6522 153.305 95.6521 137.642C95.6522 123.661 99.6138 111.051 105.963 101.754L110.456 104.403C111.508 105.024 112.826 104.21 112.74 102.991L111.76 89.0072ZM9.63194 136.286C9.14864 136.286 8.75684 136.678 8.75684 137.161C8.7569 137.644 9.14868 138.035 9.63194 138.035H17.2161C17.6993 138.035 18.0912 137.644 18.0912 137.161C18.0912 136.678 17.6994 136.286 17.2161 136.286H9.63194ZM22.6813 136.286C22.198 136.286 21.8062 136.678 21.8062 137.161C21.8063 137.644 22.1981 138.035 22.6813 138.035H30.2655C30.7487 138.035 31.1406 137.644 31.1406 137.161C31.1406 136.678 30.7488 136.286 30.2655 136.286H22.6813ZM35.7464 136.286C35.2631 136.286 34.8713 136.678 34.8713 137.161C34.8713 137.644 35.2631 138.035 35.7464 138.035H44.4973C44.9805 138.035 45.3724 137.644 45.3724 137.161C45.3724 136.678 44.9806 136.286 44.4973 136.286H35.7464ZM49.9977 136.286C49.5144 136.286 49.1226 136.678 49.1226 137.161C49.1226 137.644 49.5144 138.035 49.9977 138.035H57.5819C58.0651 138.035 58.4569 137.644 58.457 137.161C58.457 136.678 58.0651 136.286 57.5819 136.286H49.9977ZM63.0783 136.286C62.595 136.286 62.2032 136.678 62.2032 137.161C62.2033 137.644 62.5951 138.035 63.0783 138.035H70.6625C71.1457 138.035 71.5375 137.644 71.5376 137.161C71.5376 136.678 71.1457 136.286 70.6625 136.286H63.0783ZM76.1277 136.286C75.6444 136.286 75.2526 136.678 75.2526 137.161C75.2527 137.644 75.6445 138.035 76.1277 138.035H83.7119C84.1951 138.035 84.5869 137.644 84.587 137.161C84.587 136.678 84.1951 136.286 83.7119 136.286H76.1277ZM102.266 136.286C101.782 136.286 101.39 136.678 101.39 137.161C101.391 137.644 101.782 138.035 102.266 138.035H109.85C110.333 138.035 110.725 137.644 110.725 137.161C110.725 136.678 110.333 136.286 109.85 136.286H102.266ZM115.338 136.286C114.855 136.286 114.463 136.678 114.463 137.161C114.463 137.644 114.855 138.035 115.338 138.035H122.923C123.406 138.035 123.798 137.644 123.798 137.161C123.798 136.678 123.406 136.286 122.923 136.286H115.338ZM128.403 136.286C127.92 136.286 127.528 136.678 127.528 137.161C127.528 137.644 127.92 138.035 128.403 138.035H135.988C136.471 138.035 136.863 137.644 136.863 137.161C136.863 136.678 136.471 136.286 135.988 136.286H128.403ZM141.468 136.286C140.985 136.286 140.593 136.678 140.593 137.161C140.593 137.644 140.985 138.035 141.468 138.035H149.053C149.536 138.035 149.928 137.644 149.928 137.161C149.928 136.678 149.536 136.286 149.053 136.286H141.468ZM154.541 136.286C154.058 136.286 153.666 136.678 153.666 137.161C153.666 137.644 154.058 138.035 154.541 138.035H162.125C162.609 138.035 163 137.644 163.001 137.161C163.001 136.678 162.609 136.286 162.125 136.286H154.541ZM167.614 136.286C167.131 136.286 166.739 136.678 166.739 137.161C166.739 137.644 167.131 138.035 167.614 138.035H175.198C175.681 138.035 176.073 137.644 176.073 137.161C176.073 136.678 175.681 136.286 175.198 136.286H167.614ZM180.671 136.286C180.188 136.286 179.796 136.678 179.796 137.161C179.796 137.644 180.188 138.035 180.671 138.035H188.255C188.739 138.035 189.13 137.644 189.131 137.161C189.131 136.678 188.739 136.286 188.255 136.286H180.671Z\"\n    fill=\"currentColor\" />\n  \u003Cpath fill-rule=\"evenodd\" clip-rule=\"evenodd\"\n    d=\"M444.85 38.2277C447.164 38.2277 449.04 40.1028 449.04 42.4159V132.928C449.04 135.241 447.164 137.116 444.85 137.116H255.36C253.046 137.116 251.17 135.241 251.17 132.928V42.4159C251.17 40.1028 253.046 38.2277 255.36 38.2277H444.85ZM361.96 125.388C361.618 125.046 361.064 125.046 360.722 125.388L354.534 131.572C354.192 131.914 354.192 132.468 354.534 132.81C354.876 133.151 355.43 133.151 355.772 132.81L361.96 126.624C362.301 126.283 362.301 125.73 361.96 125.388ZM371.047 116.311C370.705 115.969 370.15 115.969 369.809 116.311L364.446 121.671C364.104 122.012 364.104 122.567 364.446 122.908C364.788 123.249 365.342 123.25 365.684 122.908L371.047 117.548C371.388 117.207 371.388 116.652 371.047 116.311ZM380.124 107.246C379.782 106.904 379.227 106.904 378.885 107.246L373.523 112.606C373.181 112.948 373.181 113.502 373.523 113.844C373.864 114.185 374.419 114.185 374.761 113.844L380.124 108.483C380.465 108.142 380.465 107.587 380.124 107.246ZM385.736 65.8841C385.891 64.6727 384.622 63.7845 383.536 64.3434L371.069 70.7636C370.124 71.2504 369.96 72.5334 370.752 73.2424L381.2 82.5938C382.11 83.4081 383.561 82.8672 383.717 81.6557L384.393 76.3725C391.143 77.1933 398.567 80.7709 404.771 86.9711C411.124 93.3213 414.726 100.952 415.43 107.827C415.573 109.221 416.819 110.236 418.214 110.093C419.609 109.95 420.624 108.703 420.481 107.309C419.644 99.1317 415.435 90.4514 408.362 83.3817C401.466 76.489 393.038 72.3185 385.038 71.338L385.736 65.8841ZM389.2 98.1733C388.859 97.8319 388.304 97.8318 387.962 98.1733L382.6 103.534C382.258 103.875 382.258 104.429 382.6 104.771C382.941 105.112 383.496 105.112 383.838 104.771L389.2 99.4108C389.542 99.0693 389.542 98.5149 389.2 98.1733ZM398.262 89.1047C397.92 88.7633 397.365 88.7632 397.024 89.1047L391.661 94.4649C391.319 94.8065 391.319 95.3608 391.661 95.7024C392.002 96.0436 392.557 96.0438 392.899 95.7024L398.262 90.3421C398.603 90.0007 398.603 89.4463 398.262 89.1047ZM416.431 70.9616C416.089 70.6202 415.534 70.6201 415.193 70.9616L409.83 76.3218C409.488 76.6634 409.488 77.2177 409.83 77.5592C410.172 77.9005 410.726 77.9007 411.068 77.5592L416.431 72.199C416.772 71.8575 416.772 71.3032 416.431 70.9616ZM425.508 61.891C425.166 61.5496 424.611 61.5495 424.27 61.891L418.907 67.2512C418.565 67.5928 418.565 68.1471 418.907 68.4887C419.249 68.8299 419.803 68.8301 420.145 68.4887L425.508 63.1284C425.849 62.787 425.849 62.2326 425.508 61.891ZM434.569 52.8146C434.227 52.4731 433.673 52.4731 433.331 52.8146L427.968 58.1748C427.626 58.5163 427.627 59.0706 427.968 59.4122C428.31 59.7534 428.864 59.7537 429.206 59.4122L434.569 54.052C434.91 53.7105 434.91 53.1562 434.569 52.8146ZM443.638 43.7479C443.296 43.4065 442.742 43.4064 442.4 43.7479L437.037 49.1081C436.695 49.4496 436.696 50.004 437.037 50.3455C437.379 50.6868 437.933 50.687 438.275 50.3455L443.638 44.9853C443.98 44.6438 443.979 44.0895 443.638 43.7479Z\"\n    fill=\"currentColor\" />\n  \u003Cpath fill-rule=\"evenodd\" clip-rule=\"evenodd\"\n    d=\"M684.066 38.2277C687.798 38.2281 689.667 42.7391 687.027 45.3773L596.473 135.889C595.687 136.675 594.621 137.116 593.51 137.116H506.335C504.021 137.116 502.145 135.241 502.145 132.928V42.4159C502.145 40.1028 504.021 38.2277 506.335 38.2277H684.066ZM514.603 124.566C514.261 124.224 513.707 124.224 513.365 124.566L507.178 130.751C506.836 131.093 506.836 131.646 507.178 131.988C507.519 132.329 508.073 132.329 508.415 131.988L514.603 125.803C514.945 125.462 514.945 124.908 514.603 124.566ZM523.689 115.491C523.348 115.15 522.794 115.15 522.452 115.491L517.09 120.852C516.748 121.193 516.748 121.747 517.09 122.088C517.431 122.43 517.985 122.43 518.327 122.088L523.689 116.728C524.031 116.386 524.031 115.833 523.689 115.491ZM532.102 65.8295C530.707 65.6872 529.46 66.7017 529.318 68.0957C529.175 69.4896 530.189 70.7355 531.584 70.8787C538.463 71.5825 546.096 75.1826 552.45 81.5329C558.723 87.8037 562.312 95.3226 563.079 102.13L557.738 102.392C556.518 102.452 555.865 103.855 556.607 104.827L565.115 115.969C565.76 116.814 567.051 116.751 567.611 115.847L574.992 103.928C575.635 102.889 574.848 101.555 573.628 101.615L568.161 101.882C568.161 101.878 568.162 101.874 568.161 101.871C567.324 93.6931 563.114 85.0124 556.041 77.9425C548.968 70.873 540.283 66.6668 532.102 65.8295ZM532.766 106.421C532.425 106.079 531.871 106.079 531.529 106.421L526.166 111.781C525.825 112.123 525.825 112.676 526.166 113.018C526.508 113.359 527.062 113.359 527.403 113.018L532.766 107.657C533.108 107.316 533.108 106.762 532.766 106.421ZM541.843 97.3445C541.501 97.003 540.948 97.003 540.606 97.3445L535.243 102.705C534.901 103.046 534.902 103.6 535.243 103.941C535.585 104.283 536.139 104.283 536.48 103.941L541.843 98.5809C542.185 98.2393 542.185 97.686 541.843 97.3445ZM550.92 88.2778C550.578 87.9363 550.025 87.9363 549.683 88.2778L544.32 93.638C543.978 93.9796 543.978 94.5329 544.32 94.8745C544.662 95.2161 545.215 95.2161 545.557 94.8745L550.92 89.5142C551.262 89.1727 551.262 88.6193 550.92 88.2778ZM569.066 70.1405C568.724 69.799 568.17 69.7991 567.829 70.1405L562.466 75.5008C562.124 75.8423 562.124 76.3956 562.466 76.7372C562.808 77.0788 563.361 77.0788 563.703 76.7372L569.066 71.377C569.407 71.0354 569.407 70.4821 569.066 70.1405ZM578.143 61.0699C577.801 60.7284 577.247 60.7285 576.906 61.0699L571.543 66.4302C571.201 66.7717 571.201 67.3251 571.543 67.6666C571.885 68.0082 572.438 68.0082 572.78 67.6666L578.143 62.3064C578.484 61.9648 578.484 61.4115 578.143 61.0699ZM587.219 51.9896C586.878 51.6481 586.324 51.6481 585.982 51.9896L580.62 57.3498C580.278 57.6914 580.278 58.2447 580.62 58.5863C580.961 58.9279 581.515 58.9279 581.857 58.5863L587.219 53.2261C587.561 52.8845 587.561 52.3312 587.219 51.9896ZM596.288 42.9249C595.947 42.5833 595.392 42.5833 595.05 42.9249L589.689 48.2851C589.347 48.6267 589.347 49.18 589.689 49.5216C590.03 49.863 590.584 49.8631 590.926 49.5216L596.288 44.1613C596.63 43.8198 596.63 43.2664 596.288 42.9249Z\"\n    fill=\"currentColor\" />\n  \u003Cpath fill-rule=\"evenodd\" clip-rule=\"evenodd\"\n    d=\"M850.814 38.2277C854.547 38.2281 856.416 42.739 853.777 45.3773L763.223 135.889C762.437 136.674 761.371 137.116 760.26 137.116H673.176C669.443 137.116 667.574 132.605 670.213 129.966L760.768 39.4544C761.554 38.6692 762.62 38.2277 763.731 38.2277H850.814ZM761.338 121.8C760.855 121.8 760.463 122.191 760.463 122.674V131.13H762.213V122.674C762.213 122.191 761.821 121.8 761.338 121.8ZM761.338 108.971C760.855 108.971 760.463 109.363 760.463 109.846V118.301H762.213V109.846C762.213 109.363 761.821 108.971 761.338 108.971ZM761.338 96.1402C760.855 96.1406 760.463 96.5321 760.463 97.0149V105.47H762.213V97.0149C762.213 96.532 761.821 96.1404 761.338 96.1402ZM782.263 71.887C781.043 71.951 780.395 73.3571 781.139 74.3257L784.474 78.6631C779.115 82.951 771.242 85.7443 762.35 85.7444C753.366 85.7442 745.421 82.8944 740.059 78.5305C738.972 77.6461 737.373 77.8099 736.488 78.8961C735.602 79.983 735.766 81.582 736.853 82.467C743.231 87.6574 752.348 90.8207 762.35 90.8209C772.209 90.8208 781.205 87.746 787.568 82.6884L790.833 86.9341C791.577 87.9025 793.103 87.6391 793.479 86.4767L797.791 73.138C798.118 72.127 797.33 71.1017 796.268 71.1566L782.263 71.887ZM761.338 70.4847C760.855 70.4851 760.463 70.8767 760.463 71.3594V79.8147H762.213V71.3594C762.213 70.8766 761.821 70.485 761.338 70.4847ZM761.338 57.656C760.855 57.6564 760.463 58.048 760.463 58.5307V66.986H762.213V58.5307C762.213 58.0479 761.821 57.6563 761.338 57.656ZM761.338 44.8293C760.855 44.8297 760.463 45.2212 760.463 45.704V54.1592H762.213V45.704C762.213 45.2211 761.821 44.8295 761.338 44.8293Z\"\n    fill=\"currentColor\" />\n  \u003Cpath\n    d=\"M995.759 38.2277C999.53 38.228 1001.42 42.5171 998.752 45.0253L959.55 81.9005L905.796 41.5363C905.271 41.1418 904.662 41.0182 904.096 41.0994L997.485 130.319C1000.15 132.828 998.262 137.116 994.491 137.116H905.298C902.96 137.116 901.065 135.333 901.065 133.134V42.0941C901.065 42.0204 901.07 41.9483 901.079 41.8786C901.258 39.8345 903.079 38.2277 905.298 38.2277H995.759Z\"\n    fill=\"currentColor\" />\n  \u003Cpath\n    d=\"M505.873 0C506.657 4.57042e-05 507.307 0.195499 507.823 0.587023C508.338 0.969046 508.596 1.53802 508.596 2.29251C508.596 2.76034 508.467 3.19015 508.209 3.58162C507.951 3.96344 507.497 4.26401 506.848 4.48361V4.54114C507.65 4.67487 508.205 4.96191 508.51 5.4012C508.816 5.83087 508.969 6.31772 508.969 6.86193C508.969 7.74056 508.672 8.41851 508.08 8.89604C507.497 9.38304 506.733 9.62731 505.787 9.62738C504.861 9.62738 504.158 9.42172 503.68 9.0111C503.212 8.60054 502.935 8.08005 502.849 7.44993L503.881 7.10571L503.924 7.24028C504.035 7.54934 504.211 7.82925 504.454 8.07986C504.731 8.36635 505.166 8.50986 505.758 8.50989C506.465 8.50989 506.943 8.32772 507.191 7.9648C507.449 7.6019 507.579 7.20078 507.579 6.7615C507.579 6.2173 507.378 5.80683 506.977 5.52992C506.585 5.25295 505.93 5.10026 505.013 5.07161V4.15402C505.901 4.12537 506.489 3.92484 506.776 3.55237C507.062 3.18009 507.206 2.82242 507.206 2.47876C507.206 1.62801 506.752 1.17539 505.845 1.12237L505.658 1.11749C505.467 1.11752 505.242 1.14605 504.985 1.2033C504.736 1.25105 504.511 1.3274 504.31 1.43245L504.081 2.56457L503.05 2.44951L503.322 0.687461C503.666 0.49653 504.068 0.33454 504.526 0.200875C504.985 0.0671945 505.434 0 505.873 0Z\"\n    fill=\"currentColor\" />\n  \u003Cpath\n    d=\"M905.727 2.30616L904.638 2.4066L904.466 1.26083H901.428V3.72497C901.533 3.71544 901.643 3.71034 901.757 3.71034H902.086C902.755 3.71034 903.386 3.78668 903.979 3.93949C904.58 4.09229 905.068 4.38363 905.44 4.8132C905.822 5.23335 906.014 5.84949 906.014 6.66106C906.014 7.64468 905.722 8.38068 905.14 8.86776C904.557 9.36434 903.783 9.6127 902.818 9.61275C901.91 9.61275 901.213 9.40711 900.725 8.99648C900.248 8.59544 899.96 8.08007 899.865 7.44993L900.911 7.10571C901.007 7.49723 901.203 7.8271 901.499 8.09449C901.795 8.37131 902.211 8.50985 902.746 8.50989C903.395 8.50989 903.869 8.33787 904.165 7.99405C904.461 7.65981 904.609 7.22507 904.609 6.69031C904.609 5.87861 904.337 5.3625 903.792 5.14279C903.248 4.91361 902.612 4.79958 901.886 4.79955C901.695 4.79955 901.489 4.80365 901.27 4.8132C901.059 4.82275 900.854 4.83701 900.653 4.85611L900.224 4.44071V0.143343H905.569L905.727 2.30616Z\"\n    fill=\"currentColor\" />\n  \u003Cpath fill-rule=\"evenodd\" clip-rule=\"evenodd\"\n    d=\"M765.49 6.04576H766.966L766.837 7.14862H765.49V9.48404H764.185V7.14862H759.857L759.713 6.04576L762.909 0.143343H765.49V6.04576ZM760.96 6.04576H764.185V1.26083H763.541L760.96 6.04576Z\"\n    fill=\"currentColor\" />\n  \u003Cpath d=\"M4.80573 6.47481H6.41154V7.60693H1.81068V6.47481H3.50235V1.27546H1.81068V0.143343H4.80573V6.47481Z\"\n    fill=\"currentColor\" />\n  \u003Cpath\n    d=\"M254.359 0C255.353 0 256.055 0.239186 256.466 0.716715C256.877 1.18447 257.083 1.68072 257.083 2.20573C257.083 2.85516 256.849 3.44346 256.38 3.96875C255.912 4.49397 255.348 4.96638 254.689 5.38657C254.039 5.79717 253.437 6.15968 252.883 6.47481H256.423L256.538 5.42948L257.599 5.51529L257.426 7.60693H251.407L251.292 6.58987C252.582 5.73032 253.638 4.98523 254.46 4.35489C255.281 3.71509 255.693 3.05632 255.693 2.37832C255.693 1.53787 255.166 1.11749 254.115 1.12237L254.115 1.11749C253.924 1.11754 253.695 1.14604 253.427 1.2033C253.16 1.25104 252.916 1.32238 252.697 1.41783L252.467 2.47876L251.45 2.3637L251.707 0.60165C252.118 0.401088 252.563 0.253475 253.041 0.15797C253.519 0.0529708 253.958 1.99446e-05 254.359 0Z\"\n    fill=\"currentColor\" />\u003C/g>",{"id":13,"data":14,"type":15,"maxContentLevel":29,"version":30,"tiles":31},"442929c1-9687-4429-9603-5ccd36c47bec",{"type":15,"title":16,"tagline":17,"description":17,"featureImageSquare":18,"baseColor":19,"emoji":20,"shapePreference":21,"allowContentSuspension":22,"allowContentEdits":22,"editorsChoice":6,"accreditations":23,"certificatePriceLevel":28,"certificationTitle":16},8,"Behavioral Economics","Discover how economics and behavioral psychology work together","7efe7f34-39d1-44e6-9812-5ad203679dfe","#726AD1","⚖️",4,true,[24],{"authority":25,"wasCpdTill":26,"previousCpdCreditMinutes":27},1,"2025-12-31T00:00:00Z",120,2,9,7,[32,231,410,610,767,950,1149,1305,1480,1636],{"id":33,"data":34,"type":29,"maxContentLevel":37,"version":28,"orbs":38},"8d897888-7b10-4283-805d-4c3742b71263",{"type":29,"title":35,"tagline":36},"What Is Behavioral Economics?"," The questioning of Homo Economicus",3,[39,133,191],{"id":40,"data":41,"type":28,"version":25,"maxContentLevel":37,"pages":43},"d958daa8-9ed6-4a52-b554-f724cb1df80a",{"type":28,"title":42},"Foundations of Behavioral Economics",[44,62,80,97,115],{"id":45,"data":46,"type":25,"maxContentLevel":37,"version":25,"reviews":50},"84728c9d-e0a1-4cca-af45-0bf0ef4891a7",{"type":25,"title":47,"contentRole":28,"markdownContent":48,"audioMediaId":49},"Introduction to the Pathway","\n ![Graph](image://4837afe0-f356-435b-a69c-3ad1f56c8753 \"A coupon for a 10% discount on a purchase of an item. Image: Saralekker via Wikimedia Commons\")\n\nConsider this. Last night, you used a coupon to get an $8 discount on your $80 steak dinner. Today, as you’re driving through your favorite fast food chain, a sign gleefully informs you that the $8 burgers are on a buy one get one free promotion, just for today. Which of these deals feels like a bigger win to you?\n\nIn traditional economics both of these deals are equally appealing. After all, they both save you $8. The fact that one grants you an extra burger, and the other a 10% discount on steak, is irrelevant. $8 saved is $8 saved, no ifs, no buts, and context be damned. \n\nMeanwhile, a behavioral economist would offer a different perspective — one that acknowledges how humans often perceive discounts as percentages rather than in absolute terms. In this light, it is not irrational for a consumer to prefer the buy one, get one free burger deal, as it represents a 50% discount, compared to the 10% discount on the steak.\n\nIn a nutshell, this is the difference between behavioral and traditional economics. Traditional economists model economic transactions according to certain rules around rational behavior and self-interest. Behavioral economists try to build models of economic transactions that are rooted in how humans actually behave — which, as you probably know, can often be far from rational.","f23f2f8f-8c00-4daf-ab13-7e5ff44cad55",[51],{"id":52,"data":53,"type":54,"version":25,"maxContentLevel":37},"670b11ce-7b18-436c-823c-3b88739e8920",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":55,"activeRecallAnswers":60},11,[56,57,58,59],"Which branch of economics attempts to build models of economic transactions based on actual human behavior?","Which field of economics is focused on creating models of economic transactions that reflect the real actions of humans?","In which economic discipline are models constructed that mirror the actual economic behaviors of individuals?","Which economic approach is centered on developing transaction models that are grounded in genuine human conduct?",[61],"Behavioral economics",{"id":63,"data":64,"type":25,"maxContentLevel":37,"version":25,"reviews":68},"2060fbe6-1c80-4577-ae34-209309acf349",{"type":25,"title":65,"contentRole":28,"markdownContent":66,"audioMediaId":67},"Defining Behavioral Economics","Behavioral economics is an interdisciplinary field that combines insights from psychology and economics to better understand human decision making. It seeks to explain why people make the economic choices they do, taking into account factors that traditional economics might overlook.\n\nOne of the key tenets of behavioral economics is that it challenges the traditional economic theory that humans are rational actors. It recognizes that a variety of factors influence human behavior, and that people do not always act in their own best economic interests.\n\nBehavioral economics strives to provide a more realistic and nuanced understanding of human economic behavior. It does this by studying how people behave in real-world situations rather than relying solely on theoretical models.","4ab94231-f0ef-4f2f-b518-d549e564201a",[69],{"id":70,"data":71,"type":54,"version":25,"maxContentLevel":37},"a7f72f56-2e39-4ce3-a032-cb8b7fe0e108",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":72,"multiChoiceCorrect":74,"multiChoiceIncorrect":76},[73],"Which of these is a theory that behavioral economics aims to challenge?",[75],"Humans as rational actors",[77,78,79],"Humans as irrational actors","GDP as a flawed system","Capitalism as the best economic system",{"id":81,"data":82,"type":25,"maxContentLevel":37,"version":25,"reviews":86},"04ccd1f3-91db-451e-bef2-6890bdd5e9e5",{"type":25,"title":83,"contentRole":28,"markdownContent":84,"audioMediaId":85},"Homo Economicus: The Rational Actor"," ![Graph](image://5ccf365c-c488-436c-9b24-76224fdb96b6 \"A man contemplating choices. Image:  wayhomestudio via Freepik\")\n\nAt the heart of traditional economics is the concept of Homo Economicus, a hypothetical individual who is always rational and self-interested. This framework simplifies complex economic behaviors in order to create models that predict how people will act in certain situations.\n\nAccording to this model, Homo Economicus is a cold and calculating decision maker, always seeking to maximize utility. This means making choices that provide the greatest benefit or satisfaction given the resources at hand.\n\nAnother assumption of the Homo Economicus model is that individuals have perfect information. This means they are aware of all the options available to them, understand the consequences of their choices, and can make the best decision based on this information.","28aff1f9-e96f-401c-a54e-e5d2ade41a22",[87],{"id":88,"data":89,"type":54,"version":25,"maxContentLevel":37},"d53d5963-4de8-4bbf-a095-cc43a83a40b0",{"type":54,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":90,"clozeWords":95},[91,92,93,94],"In economics, Homo Economicus is a hypothetical, rational, self-interested individual with perfect information, always seeking to maximize utility.","Homo Economicus, in economic terms, is an idealized person who rationally seeks to optimize utility with complete information","The economic model of Homo Economicus depicts a theoretical individual who, with perfect knowledge, always acts rationally and self-interestedly to maximize utility","Homo Economicus represents a hypothetical economic actor who, possessing full information, consistently makes rational, self-benefiting decisions to increase utility",[96],"Homo Economicus",{"id":98,"data":99,"type":25,"maxContentLevel":37,"version":25,"reviews":103},"b6ab73f0-1af4-49da-81a6-2c0757f96583",{"type":25,"title":100,"contentRole":28,"markdownContent":101,"audioMediaId":102},"Limitations of Homo Economicus","Unfortunately, the assumptions of traditional economics, such as rationality, self-interest, and perfect information, are often unrealistic. In the real world, people do not always behave rationally, nor do they act exclusively in their own self-interest, or have access to perfect information.\n\nHistory has shown that traditional economic models often fail to predict or explain human behavior accurately. This is because they do not take into account the complexity of human decision making, which is influenced by a variety of factors, including emotions, biases, and social context.\n\n ![Graph](image://8e28b19a-b787-4089-ba37-bb6237c3f956 \"A person at their favorite restaurant ordering off the menu. Image: pressfoto via Freepik\")\n\nFor example, traditional economics suggests that a person would make the same choice consistently given the same set of options. In fact, one individual won’t necessarily order the same food at their favorite restaurant each time they visit, even if the menu remains the same. They might have a craving for clam chowder today even though they normally order the mushroom soup. This is where behavioral economics comes in – as a response to the limitations of Homo Economicus.","e18511c7-3877-47c0-8e95-1b91cab7177f",[104],{"id":105,"data":106,"type":54,"version":25,"maxContentLevel":37},"868acb45-c78e-4a87-a158-702fa50fc646",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":107,"multiChoiceCorrect":109,"multiChoiceIncorrect":111},[108],"What are the assumptions of traditional economics?",[110],"Rationality, self-interest, and perfect information",[112,113,114],"Emotions, biases, and social context","Unlimited resources","Cognitive constraints",{"id":116,"data":117,"type":25,"maxContentLevel":37,"version":25,"reviews":121},"9f274479-6711-4235-a448-3ccefb3d7c2d",{"type":25,"title":118,"contentRole":28,"markdownContent":119,"audioMediaId":120},"Behavioral Economics vs Traditional Economics","Behavioral economics calls into question the dominance of traditional economics by providing a more realistic model of human behavior. By acknowledging the quirks of human behavior, it paints a picture of a decision maker that hits closer to home – a real, live human and not a calculating machine run on algorithms.\n\nWhile traditional economics tends to be prescriptive, telling people how they should behave, behavioral economics is descriptive. It seeks to explain how people actually behave, taking into account the complexity of human decision making.\n\nTraditional economics often relies on models like the efficient market theory, which assumes that markets are always rational and efficient. In contrast, behavioral economics acknowledges that humans sometimes make decision-making shortcuts, which may sometimes lead to inefficient outcomes.","2e82ce41-dde6-4bf6-9c3e-c1f56f64c9c8",[122],{"id":123,"data":124,"type":54,"version":25,"maxContentLevel":37},"f15d05b1-215a-4cd2-9dc8-a3b4f8856a12",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":125,"multiChoiceCorrect":127,"multiChoiceIncorrect":129},[126],"What does behavioral economics acknowledge about human decision making?",[128],"Humans sometimes make decision-making shortcuts",[130,131,132],"Humans always make rational decisions","Humans rely on efficient market theory","Humans are calculating machines",{"id":134,"data":135,"type":28,"version":25,"maxContentLevel":37,"pages":137},"d03b4576-0577-469b-843b-e30f5ba519a7",{"type":28,"title":136},"Expanding the Concept of Utility",[138,156,174],{"id":139,"data":140,"type":25,"maxContentLevel":37,"version":25,"reviews":144},"ba01e8b4-87a0-482e-98cb-efb3136fac62",{"type":25,"title":141,"contentRole":28,"markdownContent":142,"audioMediaId":143},"Utility and Its Many Faces","Is there more to life than money? Camerer, Babcock, Loewenstein, and Thaler’s 1997 study of New York City taxi drivers illustrates how humans do not equate utility solely with monetary gain. The study found that taxi drivers often set a daily earnings goal and would stop working once they reached it, even if they could have earned more by working longer.\n\n ![Graph](image://7a12c5d8-d442-4c95-8b0f-6999f8187af0 \"A taxi driver taking time to read a newspaper after reaching his daily earnings goal. Image: Tim Samuel via Pexels\")\n\nThe study brings into light some interesting questions. Why wouldn’t a person strive to make as much money as he can if all it takes is clocking more time at work? This behavior suggests that utility can come in many forms, not just monetary gain. For example, taxi drivers may value their leisure time, the convenience of not having to work longer hours, or the satisfaction of reaching their earnings goal.\n\nTraditional economic models often fail to account for these other forms of utility. They tend to focus disproportionately on the monetary aspects of decision making, ignoring other factors that can influence people's choices.","fce6b95f-ffa3-4b4c-bb59-c9e8c35ee576",[145],{"id":146,"data":147,"type":54,"version":25,"maxContentLevel":37},"e2682800-7258-41a7-8ad8-d44d1c8bbff2",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":148,"multiChoiceCorrect":150,"multiChoiceIncorrect":152},[149],"What did the 1997 study of New York City taxi drivers illustrate?",[151],"Humans do not equate utility solely with monetary gain",[153,154,155],"Humans are usually rational","Humans are self-interested","Humans value monetary gain over most other things",{"id":157,"data":158,"type":25,"maxContentLevel":37,"version":25,"reviews":162},"04e063dd-fc6c-451f-8c1a-0625c702cbad",{"type":25,"title":159,"contentRole":28,"markdownContent":160,"audioMediaId":161},"A Narrow, Monetary Approach: The Case of Gross National Product","Traditional economics often relies on monetary indicators to measure economic performance. For example, GDP or gross domestic product refers to the total value of all goods and services produced by a country in a given period.\n\nHowever, Simon Kuznets, the inventor of GDP himself, warned against using it as an indicator of a nation’s wellbeing. He recognized that GDP does not take into account factors such as income inequality, environmental degradation, or the quality of life of a country's citizens.\n\n ![Graph](image://5cf9afd7-f4ce-4f66-879d-6352d3538f94 \"Simon Kuznets. Image: via Wikimedia Commons\")\n\nUnfortunate events, like natural disasters, may lead to an increase in GDP, or income inequality might worsen despite improvements in GDP. This is because GDP measures economic activity, not economic wellbeing. Natural disasters, for instance, lead to increased economic activity due to reconstruction efforts, even though they are obviously not healthy for any society.","acea0db0-46da-4097-85ad-db37384f8e5f",[163],{"id":164,"data":165,"type":54,"version":25,"maxContentLevel":37},"b2312874-8ea5-442b-84d4-5b23ec25fcaa",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":166,"multiChoiceCorrect":168,"multiChoiceIncorrect":170},[167],"Why can natural disasters lead to an increase in GDP?",[169],"Due to increased economic activity from reconstruction efforts",[171,172,173],"Due to increased exports","Due to donations from other countries","Due to decreased population",{"id":175,"data":176,"type":25,"maxContentLevel":37,"version":25,"reviews":180},"0cf290ac-1f9b-49fa-9de4-d14800327834",{"type":25,"title":177,"contentRole":28,"markdownContent":178,"audioMediaId":179},"Gross National Happiness: New Measures Reflect Shifting Priorities","Traditional economics often overlooks aspects that are not easily measured and quantified, such as happiness and wellbeing. However, some countries are starting to recognize the limitations of a purely monetary approach and are developing new measures that reflect a broader range of priorities.\n\n ![Graph](image://45432fb1-6f36-4c13-93ca-4957b7c9c997 \"The four pillars of the Gross National Happiness index. Image: Felix Mueller via Wikimedia Commons\")\n\nFor example, Bhutan has developed an index called Gross National Happiness, which measures the nation’s collective happiness and wellbeing. This index takes into account factors such as psychological wellbeing, health, education, and environmental diversity in addition to economic indicators.\n\nSimilarly, New Zealand has introduced a Wellbeing Budget, which prioritizes the wellbeing of its citizens over economic growth. This approach reflects a growing recognition that traditional economic measures do not capture all aspects of a nation's wellbeing.","07b48794-34a6-433d-b831-f366a9d9e60a",[181],{"id":182,"data":183,"type":54,"version":25,"maxContentLevel":37},"5838bcb8-3cc0-4b9f-ab43-5001b4e7500e",{"type":54,"reviewType":28,"spacingBehaviour":25,"binaryQuestion":184,"binaryCorrect":187,"binaryIncorrect":189},[185,186],"Which index, developed by Bhutan, is used to measure the country's wellbeing?","Bhutan measures the success of its development using which index?",[188],"Gross National Happiness",[190],"Gross Domestic Product",{"id":192,"data":193,"type":28,"version":28,"maxContentLevel":37,"pages":195},"288e2a98-ef49-417f-b6c5-e6f4bf6f92a0",{"type":28,"title":194},"The Rise of Behavioral Economics",[196,214],{"id":197,"data":198,"type":25,"maxContentLevel":37,"version":25,"reviews":202},"2729304f-5b58-4f0e-a5b0-48fc5e39b9c1",{"type":25,"title":199,"contentRole":28,"markdownContent":200,"audioMediaId":201},"The New Kid on the Block Gains Momentum","Behavioral economics began as a distinct field of study in the 1970s and '80s, but its roots can be traced back to 18th-century economists. As early as then, Adam Smith recognized that human behavior is influenced by a variety of factors, not just economic incentives.\n\n ![Graph](image://87ee1979-bd81-44a9-89fd-113876cadc94 \"Richard Thaler. Image: Bengt Nyman via Wikimedia Commons\")\n\nMore recently, the work of Israeli psychologists Amos Tversky and Daniel Kahneman on uncertainty and risk has pushed behavioral economics forward. Their research has shown that people often make decisions based on heuristics and biases rather than pure rationality as traditional economics suggests.\n\nWhile it was once a niche and somewhat controversial field, behavioral economics has gained the respect of many traditional economists, especially as prominent figures like Daniel Kahneman and Richard Thaler have won the Nobel Prize in Economics in 2002 and 2017, respectively. Their work has highlighted the importance of understanding human behavior in order to make accurate economic predictions and to design effective policies.","4fcb0853-cb8d-4df1-b279-efd9ff9576bd",[203],{"id":204,"data":205,"type":54,"version":25,"maxContentLevel":37},"3bed4d0a-ed0c-4a9a-9e92-2fe008a24721",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":206,"multiChoiceCorrect":208,"multiChoiceIncorrect":210},[207],"Who pushed behavioral economics forward with their work on uncertainty and risk?",[209],"Daniel Kahneman",[211,212,213],"Adam Smith","Richard Thaler","John Nash",{"id":215,"data":216,"type":25,"maxContentLevel":37,"version":28,"reviews":220},"b4bed1d1-fa81-41a0-97f8-65f08554f284",{"type":25,"title":217,"contentRole":28,"markdownContent":218,"audioMediaId":219},"A Growing Impact","Behavioral economics has had a significant impact on various fields, including marketing, policy-making, and finance. By providing a more realistic understanding of human behavior, it has helped to improve the effectiveness of policies and interventions.\n\nBy understanding how people respond to incentives, governments can design policies that encourage desirable behaviors, such as saving for retirement or reducing energy consumption. At the forefront of such initiatives is the United Kingdom, which established its Behavioural Insights Team, also referred to as the Nudge Unit, in 2010.\n\n![Graph](image://fcb6954e-6879-451f-b092-0035cfa3bb40 \"Glass & plastic recycling bins. Image: © 2008 by Tomasz Sienicki [user: tsca, mail: tomasz.sienicki at gmail.com], CC BY 3.0 \u003Chttps://creativecommons.org/licenses/by/3.0>, via Wikimedia Commons\")\n\nConcepts from behavioral economics are also widely used by organizations to influence consumer behavior. For example, ‘nudges’ have been used to help consumers make healthier food choices, invest more into their future, or to reduce plastic waste. These strategies recognize that people do not always act rationally, and that their decisions may be swayed by a change in their decision-making environment.","a704f145-7423-404d-ad39-64a7f3eedc47",[221],{"id":222,"data":223,"type":54,"version":25,"maxContentLevel":37},"7730dd97-d720-4f32-ad3b-adfa45ef9756",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":224,"activeRecallAnswers":229},[225,226,227,228],"What term from behavioral economics refers to small changes in the decision-making environment that can influence people's behavior?","What is the term used in behavioral economics to describe minor modifications in the environment that can sway people's actions?","In the context of behavioral economics, what is the term for subtle environmental changes that can impact human behavior?","What is the behavioral economics concept that refers to slight alterations in the environment that can affect the way people behave?",[230],"Nudges",{"id":232,"data":233,"type":29,"maxContentLevel":37,"version":28,"orbs":236},"669a6c6f-47d5-4c25-827a-9c215939b0d8",{"type":29,"title":234,"tagline":235},"Heuristics","How we navigate the world with mental shortcuts.",[237,296,353],{"id":238,"data":239,"type":28,"version":28,"maxContentLevel":37,"pages":241},"823e0a52-1cab-4f7c-8025-7c7ef2dd83f9",{"type":28,"title":240},"Understanding Heuristics",[242,260,278],{"id":243,"data":244,"type":25,"maxContentLevel":37,"version":28,"reviews":248},"641c2d23-c0fe-4551-83ca-4ef0e1b58cb9",{"type":25,"title":245,"contentRole":28,"markdownContent":246,"audioMediaId":247},"Defining Heuristics","The human brain, despite its immense power and complexity, is not without limitations. This is evidenced by studies such as the Invisible Gorilla test. This is a simple test that asks to participants to watch a video of people passing a basketball between each other, and count the number of passes.\n\nWithin the video, a gorilla appears in the background. Participants that were counting the basketball passes rarely notice this, while ones who were just watching the video notice it straight away.\n\n![Graph](image://803cb339-2063-43bb-96d0-a3f595742596 \"High school basketball practice. Image: Seandaros, CC0, via Wikimedia Commons\")\n\nIn other words, people’s response to the same set of circumstances and information can vary wildly, depending on what we are prioritising. Our brains use various mechanisms to prioritise certain pieces of information over others.\n\nOne such mechanism is the use of heuristics, or mental shortcuts, that our brains employ to speed up decision making. Heuristics are cognitive strategies or rules that simplify mental processes, allowing us to make decisions, judgments, and solve problems quickly and efficiently. Understanding these shortcuts can provide insights into decision-making behaviors.\n\nThe concept of heuristics was introduced by psychologists Amos Tversky and Daniel Kahneman in the 1970s, laying the foundation for much of our current understanding of heuristics. These concepts have since been widely adopted and further developed in behavioral economics.","6c5a930c-d50e-49fc-bc07-9b2c6da0b4a1",[249],{"id":250,"data":251,"type":54,"version":25,"maxContentLevel":37},"9eac87bf-782b-49eb-bdff-d990ed474b33",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":252,"multiChoiceCorrect":254,"multiChoiceIncorrect":256},[253],"What are heuristics?",[255],"Mental shortcuts for decision making",[257,258,259],"Cognitive biases that inhibit our decision-making skills","Systematic errors","Automated information processing",{"id":261,"data":262,"type":25,"maxContentLevel":37,"version":25,"reviews":266},"567bbbfb-3a29-4fb3-bb84-1614344e402a",{"type":25,"title":263,"contentRole":28,"markdownContent":264,"audioMediaId":265},"Why We Use Heuristics"," ![Graph](image://41529cbe-2bb3-4423-815d-5a992e81e2f3 \"A woman contemplating her next chess move. Image: emre keshavarz via Pexels\")\n\nHeuristics manifest in various forms, as in the use of trial and error, rules of thumb, or educated guesses. These strategies are not random. They are often based on past experiences, learned behaviors, or innate cognitive processes. For instance, an educated guess might be based on prior knowledge or intuition.\n\n\nThe primary aim of heuristics is not to achieve the ideal or optimal outcome. Instead, they serve to provide practical, quick-fix solutions that require minimal cognitive effort. This is known as the principle of 'satisficing', a term coined by economist and psychologist Herbert Simon. Satisficing suggests that people often make decisions that are 'good enough', rather than spending additional time and effort to find the best possible solution.\n\nHeuristics are a double-edged sword: with enhanced efficiency, we compromise the quality of our decisions. But as Simon suggests, humans are happy with ‘good enough,’ especially when stakes are low. For instance, a reasonably healthy individual will not waffle over what to order for lunch. He’ll just order what he feels like having instead of running through all the possibilities and their possible consequences on his health and bank account.​​","baaaa8bd-a979-418c-88fb-4cd9d7cb3c7a",[267],{"id":268,"data":269,"type":54,"version":25,"maxContentLevel":37},"2a4c8da4-bddb-4c93-946b-0452d0e4f65b",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":270,"multiChoiceCorrect":272,"multiChoiceIncorrect":274},[271],"What is the primary aim of heuristics?",[273],"Provide practical, quick-fix solutions",[275,276,277],"Achieve the lowest cost","Optimize results","Maximize happines",{"id":279,"data":280,"type":25,"maxContentLevel":37,"version":25,"reviews":284},"6666cff9-9a37-4d85-a28b-dd91f71125ca",{"type":25,"title":281,"contentRole":28,"markdownContent":282,"audioMediaId":283},"Heuristics in Everyday Life","\n ![Graph](image://62e9aed2-f136-46af-a7a7-5139778190d1 \"A shop placing goods on sale to influence purchasing decisions. Image: via Hippo Px\")\n\nHeuristics are also applied in practical contexts, such as the design of user interfaces. In websites and mobile applications, designers influence decision making by using a brighter color for the button they prefer users to choose while leaving the less preferred option with an unremarkable gray color. This leverages users’ tendency to notice and interact with objects that stand out visually.\n\nRetail stores often contrast sale prices to their original retail price to influence purchasing decisions. This practice relies on the anchoring heuristic, in which people rely heavily on the first piece of information they encounter – the anchor – when making decisions. In this case, the original price serves as the anchor, making the sale price seem more attractive in comparison.\n\nHeuristics also guide 'common-sense' decisions in everyday situations. When walking alone at night, we might instinctively avoid dark alleyways, likely because we associate such contexts with danger. In this case, we are drawing on the availability heuristic, or making decisions based on information that is salient to us. These are all examples of how heuristics can often serve as useful guides in our daily lives.","912b4498-3830-430a-a133-68042462d111",[285],{"id":286,"data":287,"type":54,"version":25,"maxContentLevel":37},"099af535-e96c-4fe9-9474-29174ead333a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":288,"multiChoiceCorrect":290,"multiChoiceIncorrect":292},[289],"What is the anchoring heuristic?",[291],"Relying heavily on the first piece of information",[293,294,295],"Ignoring all information","Relying on the last information","Relying on the most obvious information",{"id":297,"data":298,"type":28,"version":28,"maxContentLevel":37,"pages":300},"ea4fe317-be6f-4763-880c-92852ac0ed37",{"type":28,"title":299},"Two-System Thinking",[301,319,337],{"id":302,"data":303,"type":25,"maxContentLevel":37,"version":25,"reviews":307},"db76fc3d-6ce8-48da-8ba7-44a6762e7c0c",{"type":25,"title":304,"contentRole":28,"markdownContent":305,"audioMediaId":306},"Kahneman's Two-System Thinking","The concept of two-system thinking, as laid out by Daniel Kahneman in *Thinking, Fast and Slow*, provides a framework for laypeople in understanding the cognitive processes that underpin human decision making. Kahneman proposes that our cognitive functioning can be divided into two distinct systems, each with their own specialty. \n\n ![Graph](image://9e4dccfd-6045-4472-a969-a2cc58c23239 \"Daniel Kahneman. Image: nrkbeta via Wikimedia Commons\")\n\nAccording to Kahneman, system 1 thinking, which is fast and intuitive, might be employed when performing simple arithmetic or making a quick decision – 2 + 2 = 4, or crossing the street when the light turns green. Meanwhile, system 2 thinking, which is slower and more deliberate, performs more complex tasks like solving calculus problems. This system is also engaged when we need to focus our attention, make deliberate choices, or think critically.\n\nUnderstanding the two systems helps us appreciate the role of heuristics in decision making. System 1, characterized by quick, automatic thinking, often relies on heuristics to make decisions with minimal cognitive effort. In contrast, system 2 requires slower, more deliberate thought. It is this system that allows us to override the automatic responses of system 1 when necessary, and engage in more rational, considered decision making.","a3441f40-684e-4509-bbe9-3adb41fba70d",[308],{"id":309,"data":310,"type":54,"version":25,"maxContentLevel":37},"7e8cd8d1-f110-4889-96a5-8f1831958e22",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":311,"multiChoiceCorrect":313,"multiChoiceIncorrect":315},[312],"What is System 1 thinking characterized by?",[314],"Quick, automatic thinking",[316,317,318],"Slow, deliberate thought","Complex problem solving","Overriding logic with emotions",{"id":320,"data":321,"type":25,"maxContentLevel":37,"version":28,"reviews":325},"55a183ac-a254-44dd-89ca-ef210c0baedc",{"type":25,"title":322,"contentRole":28,"markdownContent":323,"audioMediaId":324},"A Delicate Balance","System 1 thinking is often referred to as our intuitive system. It runs smoothly in the background, like an efficient and unobtrusive stagehand, away from the spotlight, making sure things are going as they should.\n\n![Graph](image://eeced8cc-7533-4826-a050-28752bd74e07 \"Stagehands moving figures behind a theatre screen. Image: Henri Rivière, Public domain, via Wikimedia Commons\")\n\nInterestingly, even when we believe we are making rational decisions, System 1 still impacts on our choices. This is because our beliefs and biases, which are deeply ingrained in our System 1 thinking and part of the mental shortcuts it employs, can subtly sway our decision-making process. This can occur even when we are consciously trying to think more slowly and more deliberately.\n\nSystem 1 and System 2 thinking interact in a dual process. In any decision-making scenario, both systems are at play. System 1 provides quick, intuitive responses, while System 2 checks these responses for errors and tries to make adjustments when necessary. This dual process allows us to balance speed and accuracy in our decision making.","849d5090-50a5-4005-80a3-8c6af894a2db",[326],{"id":327,"data":328,"type":54,"version":25,"maxContentLevel":37},"1fec4fba-8597-4cc4-a774-62c7f5478ea8",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":329,"multiChoiceCorrect":331,"multiChoiceIncorrect":333},[330],"What is System 1 thinking often referred to as?",[332],"Our intuitive system",[334,335,336],"Our rational system","Our conscious system","Our irrational system",{"id":338,"data":339,"type":25,"maxContentLevel":37,"version":25,"reviews":343},"5703fcfe-3b11-446c-a57c-0d798da2b88a",{"type":25,"title":340,"contentRole":28,"markdownContent":341,"audioMediaId":342},"Heuristics in Cognitive Psychology","Since the introduction of the term ‘heuristics’ in cognitive psychology, numerous cognitive shortcuts have been explored and classified by experts. These play a central role in shaping our quick judgments, especially when overwhelmed with information.\n\nSome heuristics are rooted in formal models, permitting mathematical proofs and algorithms. In contrast, informal ones are more like general rules of thumb guiding our decision-making processes.\n\n ![Graph](image://4bb12b12-8013-46ab-ae78-563ec2e7ee75 \"Gerd Gigerenzer. Image: Franz Johann Morgenbesser via Wikimedia Commons\")\n\nYet, it's essential to view heuristics beyond mere cognitive biases. Evolutionary psychologists highlight their adaptive value. For instance, German psychologist Gerd Gigerenzer coined the term ‘adaptive toolbox’. He posited that heuristics aren't always secondary to deliberate thinking. In many contexts, they offer effective, efficient guidance, steering us towards satisfactory outcomes without exhaustive contemplation.","6282fad2-7485-452f-aa6e-bbfee3e7b3db",[344],{"id":345,"data":346,"type":54,"version":25,"maxContentLevel":37},"7a23ff82-37ac-4f4b-b681-63170f32cdfb",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":347,"multiChoiceCorrect":349,"multiChoiceIncorrect":351},[348],"Who coined the term 'adaptive toolbox' in the context of cognitive psychology and heuristics?",[350],"Gerd Gigerenzer",[352,209,212],"Sigmund Freud",{"id":354,"data":355,"type":28,"version":28,"maxContentLevel":37,"pages":357},"e86d827b-195c-43aa-884c-2c6f4b72899f",{"type":28,"title":356},"Heuristics in Practice",[358,374,392],{"id":359,"data":360,"type":25,"maxContentLevel":37,"version":25,"reviews":364},"699d8661-f8f2-470d-b9ce-481b9253d9c9",{"type":25,"title":361,"contentRole":28,"markdownContent":362,"audioMediaId":363},"Quick Decisions With Fast and Frugal Trees","Quick thinking is paramount in the fast-paced environment of a hospital’s emergency department. Here, medical practitioners do not have the luxury of time. They cannot question patients at length or run all possible tests on patients. Instead, they use whatever information is at hand to go down a path of questioning and, ultimately, to decide what must be done.\n \nDoctors might go down a series of yes-no questions to eliminate likely options. Is the patient’s heart rate stable? If it is not, then run these tests. If it is, then is the patient running a fever? If they are, administer these drugs. If they aren't, then check for this other thing instead. \n\n ![Graph](image://6b9de34c-cac9-4b20-b59a-66de34677aff \"An example of a fast-and-frugal tree that helps emergency room doctors decide whether to send a patient to a regular nursing bed or the coronary care unit. Image: Silvia Calvanelli via Wikimedia Commons\")\n \nThis kind of decision-making process uses a heuristic model called fast and frugal trees (FFTs). Essentially, FFTs use binary questions answered sequentially to reach a decision with minimal time and effort. Where time is a limited resource – emergency room triage, military operations, and customer relations – FFTs are an important tool. Like most heuristics, FFTs don’t always produce the most accurate or optimal decisions, but their efficiency and ease of use is vital in these contexts.","5d0dbd17-44df-4f60-b514-25eee3090be9",[365],{"id":366,"data":367,"type":54,"version":25,"maxContentLevel":37},"da8b3528-c791-4265-89ca-26bf541ec08a",{"type":54,"reviewType":28,"spacingBehaviour":25,"binaryQuestion":368,"binaryCorrect":370,"binaryIncorrect":372},[369],"Which of these is a decision-making technique used by doctors in emergency situations?",[371],"Fast and frugal trees",[373],"Crazy 8s",{"id":375,"data":376,"type":25,"maxContentLevel":37,"version":25,"reviews":380},"1433e52b-d2f2-4204-9d9c-6f4eca870345",{"type":25,"title":377,"contentRole":28,"markdownContent":378,"audioMediaId":379},"The Availability Heuristic","The availability heuristic is a mental shortcut that involves making decisions based on information that is most readily available in our memory. This heuristic operates on the notion that if something can be recalled, it must be important – or at least more important than alternatives that are not as readily recalled.\n\n ![Graph](image://0beca42f-5a38-4a94-a532-a41a23347333 \"A child scared of falling. Image: D'Arcy Norman via Wikimedia Commons\")\n\nThe availability heuristic can significantly influence our perceptions and decisions. For instance, many people's fear of flying can be attributed to this heuristic. They overestimate the chance of a plane crash because past incidents reported in the media have formed a strong impression in their memory, even if statistically, flying is much safer than other forms of transport.\n\nThis heuristic can lead to poor decision making. In policymaking, for example, an overemphasis on recent events that happen to be top of mind can lead to unnecessarily prioritizing​ certain matters over other more important or urgent concerns.","22dbfa30-726f-4047-920d-5c3459c58d28",[381],{"id":382,"data":383,"type":54,"version":25,"maxContentLevel":37},"605fb752-0c9b-4296-9c7b-6e2d084873fe",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":384,"multiChoiceCorrect":386,"multiChoiceIncorrect":388},[385],"What is the availability heuristic?",[387],"A mental shortcut based on readily available information",[389,390,391],"A decision-making process based on emotions","A thorough evaluation of relevant information","A method for prioritizing tasks",{"id":393,"data":394,"type":25,"maxContentLevel":37,"version":28,"reviews":398},"3f7debd7-618a-4fe2-8c33-a9361aa93396",{"type":25,"title":395,"contentRole":28,"markdownContent":396,"audioMediaId":397},"When Heuristics Fall Short","The use of heuristics can be seen as a rational response to humans’ limited information processing capabilities. Given the vast amount of information we encounter and the decisions we have to make on a daily basis, heuristics serve as practical tools that allow us to function effectively.\n\nHowever, while heuristics are efficient, they do not always lead to the most rational or optimal decisions. Because they simplify complex problems, they also often ignore certain details and nuances that could be crucial. Thus, relying on heuristics can sometimes lead to errors or biases in our decision making.\n\nHeuristics can also lead to systematic errors in thinking, what psychologists call cognitive biases. These biases can distort our perception of reality, leading us to make irrational decisions. These decisions will ultimately affect us and the people around us. Thus, while heuristics are practical tools, they carry limitations and present potential pitfalls.\n\n![Graph](image://8a2dac4f-211c-4e74-9f3f-c747d0cc8602 \"Referees get involved in an ice-hockey fight. Image: mark6mauno, CC BY 2.0 \u003Chttps://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons\")","7f9891a0-8edd-4eb5-9925-f06e6d6414f5",[399],{"id":400,"data":401,"type":54,"version":25,"maxContentLevel":37},"4bbbffab-8b89-4039-b2b8-cae33fc0bddc",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":402,"multiChoiceCorrect":404,"multiChoiceIncorrect":406},[403],"What can an overreliance on heuristics lead to?",[405],"Oversimplification of complex problems",[407,408,409],"Overthinking","Optimal decisions","Efficient processing",{"id":411,"data":412,"type":29,"maxContentLevel":37,"version":28,"orbs":415},"cd54a480-43db-45b2-acc1-3f6a725b8566",{"type":29,"title":413,"tagline":414},"Basic Principles of Behavioral Economics","The paradigms that separate behavioral economics from its more traditional cousin.",[416,474,551],{"id":417,"data":418,"type":28,"version":25,"maxContentLevel":37,"pages":420},"2ba89d4c-17d5-4347-bb93-20b229825619",{"type":28,"title":419},"Foundations and Rationality",[421,438,456],{"id":422,"data":423,"type":25,"maxContentLevel":37,"version":25,"reviews":427},"fdc47017-ff21-472d-a258-6277ec120711",{"type":25,"title":424,"contentRole":28,"markdownContent":425,"audioMediaId":426},"The Foundations of Behavioral Economics","The roots of behavioral economics can be traced back to the 18th century, when economist Adam Smith noted that human decision making is often influenced by overconfidence, loss aversion, and a lack of self-control. Since then, these observations have been formalized by the likes of Herbert Simon, Daniel Kahneman, and Richard Thaler.\n\n ![Graph](image://c3c76de2-7189-4658-aaf6-4b78e67c4689 \"Adam Smith. Image: Scottish National Gallery via Wikimedia Commons\")\n\nIn behavioral economics, Homo Psychologicus, not Homo Economicus, takes center stage. This is a significant shift in perspective. While Homo Economicus is a rational, self-interested actor, Homo Psychologicus is more complex. Driven by emotions, biases, and social context, Homo Psychologicus does not always make optimal decisions. This more nuanced interpretation of human behavior forms the basis of behavioral economics.\n\nWith Homo Psychologicus as its model, behavioral economics acknowledges the complexity and variability of human decision making. It recognizes that humans are not always rational but are influenced by a range of factors, many of which are emotional or psychological in nature.","30c49849-3e4c-44fb-a150-c2ec9d7bc9d8",[428],{"id":429,"data":430,"type":54,"version":25,"maxContentLevel":37},"fe9aef79-8623-411e-80aa-56710a0d06d8",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":431,"activeRecallAnswers":436},[432,433,434,435],"In behavioral economics, what term is used to represent the model of human behavior that is influenced by emotions, biases, and social context?","What is the term in behavioral economics that signifies a model of human behavior driven by emotions, biases, and societal context?","Which model in behavioral economics is characterized by the influence of emotions, biases, and social context on human behavior?","In the field of behavioral economics, which term represents a human behavior model that is shaped by emotional, bias, and social factors?",[437],"Homo Psychologicus",{"id":439,"data":440,"type":25,"maxContentLevel":37,"version":25,"reviews":444},"94d736a2-b993-469c-8448-0fc0878196aa",{"type":25,"title":441,"contentRole":28,"markdownContent":442,"audioMediaId":443},"What Is Bounded Rationality?","Introduced by Herbert Simon, the concept of Bounded Rationality proposes that human decision making can never be fully rational the way traditional economics suggests. Some decision problems are too complex, opening up a universe of considerations. Other times, situations require snap decisions, denying us the time needed to carefully consider all options. Additionally, our cognitive facilities are limited. Sometimes our minds simply do not have the computing power to optimize choices.\n\n ![Graph](image://65c56bbf-8ac9-4a7e-8faa-cefce4fb035f \"Herbert Simon. Image: Rochester Institute of Technology via Wikimedia Commons\")\n\nOn some level, humans understand these limitations, which is why we ‘satisfice.’ In complex and uncertain situations, we do not necessarily aim for the best possible outcome but settle for 'good enough' – contrary to what traditional economics espouses.\n \nAnother ​​point of difference from conventional economics is the acknowledgement that we are complicated beings in a complex ​world. Where Econ 101 has a penchant for ‘holding all other things equal,' bounded rationality recognizes that the real world hardly bends to such theoretical shortcuts.","f64aac1d-7d25-4eae-bd97-53c4b75e8d31",[445],{"id":446,"data":447,"type":54,"version":25,"maxContentLevel":37},"1f273a4b-fe5c-4184-8030-00053b1a7136",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":448,"multiChoiceCorrect":450,"multiChoiceIncorrect":452},[449],"According to the concept of Bounded Rationality, what do humans do in complex and uncertain situations?",[451],"Settle for 'good enough'",[453,454,455],"Aim for the best","Avoid decision making","Make irrational choices",{"id":457,"data":458,"type":25,"maxContentLevel":37,"version":25,"reviews":462},"871aed12-a54f-42bb-9f2b-0b49d7cb6140",{"type":25,"title":459,"contentRole":28,"markdownContent":460,"audioMediaId":461},"Bounded Rationality in the Real World"," ![Graph](image://f594c959-ead9-4c97-8f95-c6680f6c998e \"An HR manager reading through a resume while interviewing a potential employee. Image: yanalya via Freepik\")\n\nFar from being ‘irrational,’ the habit of satisficing can be considered a practical adaptation in light of the decision-making limitations we face.\n\nFor example, consider an HR manager looking to fill an important position within his organization. It would be impractical for him to study all possible candidates one by one. Instead, he must find ways to narrow down his options efficiently. This might involve setting certain minimum qualifications or other criteria to screen applicants. He might unintentionally miss out on the perfect candidate, but he will still end up finding a fairly good hire with this method.\n\nSimilarly, a young adult choosing what to major in college does not have the capacity to sift through the costs and benefits of all possible options. They might consider factors such as their interests, job prospects, and the advice of others, but ultimately, they must make a decision based on limited information and using their own ‘imperfect’ methods.","3143a6a8-e802-4eb7-8c19-f4d144756c32",[463],{"id":464,"data":465,"type":54,"version":25,"maxContentLevel":37},"5eb42e88-48c0-4714-91ac-e46adaee443f",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":466,"multiChoiceCorrect":468,"multiChoiceIncorrect":470},[467],"According to the concept of Bounded Rationality, what might an HR manager do to narrow down options efficiently?",[469],"Set minimum qualifications or criteria",[471,472,473],"Prioritize applicants they know personally","Ignore applicants' qualifications","Rely solely on intuition",{"id":475,"data":476,"type":28,"version":28,"maxContentLevel":37,"pages":478},"3fb38185-cd7e-4e4f-a66d-6b908d87fc2a",{"type":28,"title":477},"Loss Aversion and Mental Accounting",[479,497,515,533],{"id":480,"data":481,"type":25,"maxContentLevel":37,"version":28,"reviews":485},"2b14058e-78d0-46bc-8cc5-012609b23040",{"type":25,"title":482,"contentRole":28,"markdownContent":483,"audioMediaId":484},"Loss Aversion","Another key principle in behavioral economics is loss aversion, which suggests that people feel the pain of losing more intensely than the pleasure of gaining. This asymmetry in our emotional responses to gains and losses can significantly influence our decision-making processes.\n\nLoss aversion often leads individuals to avoid risks where potential losses are perceived, even if potential gains are relatively higher. This can result in conservative decision-making, as individuals seek to avoid the pain of loss.\n\nFor instance, some people choose to park their savings in low-interest-bearing savings accounts when they could be earning much higher rates playing the stock market. This is because they are loss-averse. The potential for higher gains in the stock market is outweighed by the fear of potential losses.\n\n![Graph](image://44a7b765-e758-4f65-aaf3-8d60f0f8e0f8 \"Stock market crashing. Image: https://www.rawpixel.com/image/5926718, CC0, via Wikimedia Commons\")","5ec2dea4-1aa9-49a0-9a7e-96629aefc135",[486],{"id":487,"data":488,"type":54,"version":25,"maxContentLevel":37},"b1b75363-e6dd-4426-99b9-5c18fdde235f",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":489,"multiChoiceCorrect":491,"multiChoiceIncorrect":493},[490],"What does loss aversion lead individuals to do?",[492],"Avoid risks where potential losses are perceived",[494,495,496],"Seek high-risk investments","Ignore potential gains","Invest in the stock market",{"id":498,"data":499,"type":25,"maxContentLevel":37,"version":25,"reviews":503},"40ce9a6a-84ad-48af-8713-503a4040a0f9",{"type":25,"title":500,"contentRole":28,"markdownContent":501,"audioMediaId":502},"Why Are Humans Loss Averse?","Loss aversion can be traced back to our neurological makeup. Research has shown that our brains react more strongly to experiences of loss than to equivalent gains. This means that the pain of losing something is literally felt more intensely than the pleasure of gaining something of equal value.\n\nCultural factors can also influence the degree to which an individual is loss-averse, as different cultures may have different attitudes towards risk and loss. As a behavioral principle, it appears that even loss aversion is shaped by broader social and cultural factors.\n\n ![Graph](image://96597b66-7c54-4c58-a0bc-d42b7db8eff3 \"A graph depicting loss aversion. Image: Laurenrosenberger via Wikimedia\")\n\nInterestingly, a study conducted by London Business School professor Ena Inesi found that people in positions of power are less likely to be loss-averse. This is because they are more capable of dealing with potential loss, perhaps due to their greater resources or their ability to influence outcomes. This finding suggests that loss aversion is not a universal trait, but can vary depending on one's circumstances.","9d112c5a-b174-42db-afcf-c9d98bb8ee4b",[504],{"id":505,"data":506,"type":54,"version":25,"maxContentLevel":37},"2fa0302a-5fb3-4853-9887-61878456565a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":507,"multiChoiceCorrect":509,"multiChoiceIncorrect":511},[508],"What does research say about our brains' reaction to loss and gain?",[510],"React more strongly to experiences of loss",[512,513,514],"React equally to loss and gain","React more to gains","React randomly to loss or gain",{"id":516,"data":517,"type":25,"maxContentLevel":37,"version":28,"reviews":521},"b7ec4ddb-aa77-482a-b88b-8af2cc844f6c",{"type":25,"title":518,"contentRole":28,"markdownContent":519,"audioMediaId":520},"Mental Accounting","Mental accounting is a concept that helps explain the subjective value we assign to our money. It suggests that people often categorize their money into different mental accounts, such as \"savings\" or \"disposable income,\" and assign different values to these categories. This stands in contrast to traditional economics, which assumes that all money is interchangeable.\n\n![Graph](image://19274ac8-ec34-4d96-a256-880a4f910166 \"Shelves filled with piggy banks. Image: Rod Waddington, CC BY-SA 2.0 \u003Chttps://creativecommons.org/licenses/by-sa/2.0>, via Wikimedia Commons\")\n\nIf a person receives a bonus at work, they may view this money as \"extra\" and spend it on non-essentials, even if they have outstanding debts or other better uses for this cash. In this way, mental accounting can lead to seemingly irrational financial behavior when one encounters windfalls or bonuses.\n\nMental accounting also helps explain why people often maintain separate accounts for different purposes – one for vacations, another for monthly bills. This can lead to missed investment opportunities or higher transaction costs, but at the same time, it allows for easier tracking of progress towards one’s financial goals or for more controlled spending.","afc46338-9580-4836-baed-b167e6571bfd",[522],{"id":523,"data":524,"type":54,"version":25,"maxContentLevel":37},"47a01b4f-f2c3-4827-abcb-adb2204d392d",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":525,"multiChoiceCorrect":527,"multiChoiceIncorrect":529},[526],"Why do people maintain separate accounts according to mental accounting?",[528],"Easier tracking of financial goals",[530,531,532],"Avoiding taxes","Hiding money","Increasing interest",{"id":534,"data":535,"type":25,"maxContentLevel":37,"version":25,"reviews":539},"0f1da0f1-6793-4231-b20c-be99c6c8a1eb",{"type":25,"title":536,"contentRole":28,"markdownContent":537,"audioMediaId":538},"The Impact of Mental Accounting on Daily Life"," ![Graph](image://abfbebab-5af6-43a3-a0e9-372a0a31fca9 \"A couple sitting at a table in a fancy restaurant, looking at the menu. Image: Jep Gambardella via Pexels\")\n\nShrewd marketers use mental accounting to sneak their products or services into our budget plans. For example, we might find it absurd to set aside $200 for a fancy steak dinner. By positioning that very same steak dinner not as any other meal but as a special experience to enjoy with loved ones, marketing experts make the idea of spending $200 on a meal palatable. Neither the price nor the product has changed. What has changed is the way we perceive the product – not as a regular meal but as a celebration.\n\nPayment decoupling is another powerful technique related to mental accounti​​ng. Parting with our hard-earned money hurts much more when we pay with cash as opposed to our credit cards. When we make an installment purchase and defer payments, the immediate pain of parting with money is further lessened. When companies successfully implement payment decoupling strategies, we are prone to increase our spending. ​","a66d5e7d-76a8-42d8-ab0c-519b5d47d369",[540],{"id":541,"data":542,"type":54,"version":25,"maxContentLevel":37},"cad82abc-1a02-4e0c-a0b8-a93bbcd5951b",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":543,"multiChoiceCorrect":545,"multiChoiceIncorrect":547},[544],"What is the effect of payment decoupling?",[546],"Increase in spending",[548,549,550],"Decrease in spending","No change in spending","Irregular spending patterns",{"id":552,"data":553,"type":28,"version":25,"maxContentLevel":37,"pages":555},"e47b386c-304c-4263-930d-180e6a4b4f43",{"type":28,"title":554},"Framing and Anchoring Effects",[556,574,592],{"id":557,"data":558,"type":25,"maxContentLevel":37,"version":25,"reviews":562},"34c856bc-71a3-4707-938a-ae4b54bdd6f1",{"type":25,"title":559,"contentRole":28,"markdownContent":560,"audioMediaId":561},"The Framing Effect","The framing effect explores how the presentation of information can significantly impact decision making. \n\nThe framing effect was famously demonstrated by Amos Tversky and Daniel Kahneman in a 1981 study.\n\n ![Graph](image://efa27d6b-f10c-4d38-b569-1fdb6b1d6e63 \"A portrait of Daniel Kahneman. Image: nrkbeta via Wikimedia\")\n\nParticipants in the study were presented with a choice between two different treatments for 600 people suffering from a disease.\n\nTreatment A would save 200 lives but would result in 400 deaths. Treatment B would have a 33% chance of saving all of the lives, but a 66% chance that everyone would die.Tverysky and Kahneman were not interested in the ethics of this question. Instead they wanted to see how the wording of the question affected people’s choices.\n\nFirst, they asked the question in a way that emphasized the number of deaths in Treatment A – saying ‘Treatment A will result in 400 deaths’. This same phrasing also downplayed the number of deaths potentially caused in Treatment B.\n\nNext, they asked the question again (to a different group). This time, they emphasized the number of lives saved by Treatment A (200), and drew attention to how many lives could potentially be lost under Treatment B.\n\nThe difference in results is astonishing – when the negatives of Treatment A were emphasized, only 22% of people chose it. When the positives were emphasized, that number rose to 72%.","7b65de15-a94e-447b-a925-27d671364ae1",[563],{"id":564,"data":565,"type":54,"version":25,"maxContentLevel":37},"83587d41-cebb-4a48-9ef8-f8950f6ee57a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":566,"multiChoiceCorrect":568,"multiChoiceIncorrect":570},[567],"What does the framing effect explore?",[569],"Impact of information presentation on decision making",[571,572,573],"Influence of scarcity on perceived value","Bias and errors due to scarcity heuristic","Real-life examples of availability heuristic",{"id":575,"data":576,"type":25,"maxContentLevel":37,"version":25,"reviews":580},"755db58e-f821-4ff3-8e94-4dc037943dc1",{"type":25,"title":577,"contentRole":28,"markdownContent":578,"audioMediaId":579},"Framing at Work"," ![Graph](image://65a8e184-04d0-483e-b0d1-dd2f006af11f \"A high-end brand store with a well-dressed mannequin in the window display. Image: Aysegul Alp via Pexels\")\n\nThe influence of framing can be seen in various aspects of daily life. In politics and journalism, the way issues are framed can sway public opinion. In the legal profession, how arguments are presented can influence court decisions.\n\nWhen we know little about something or someone, we rely on framing to form an initial impression. We might judge a person based on how they dress or how they carry themselves. A reliance on framing can lead to biases and stereotypes. This highlights the importance not just of being aware of how framing impacts our opinions but also of how others perceive us.\n\nHigh-end brands use framing techniques expertly. By creating a certain image around their products, they can persuade consumers to pay a premium compared to their generic counterparts. Designer fashion brands offer a veneer of luxury; branded medicine, a sense of security; and branded baby products, peace of mind. This is because we tend to prefer prettily packaged products that make us feel good about ourselves.","681e8ff2-c4a4-44a7-a40d-4236263a7a59",[581],{"id":582,"data":583,"type":54,"version":25,"maxContentLevel":37},"44d4857e-40be-4a29-827e-0568f75c8f25",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":584,"multiChoiceCorrect":586,"multiChoiceIncorrect":588},[585],"From the perspective of behavioral economics, what can influence public opinion in politics and journalism?",[587],"The way issues are framed",[589,590,591],"The way issues are ignored","The way issues are solved","The way issues are prioritized",{"id":593,"data":594,"type":25,"maxContentLevel":37,"version":25,"reviews":598},"063d88b4-708c-4397-9898-6e83e1c61395",{"type":25,"title":595,"contentRole":28,"markdownContent":596,"audioMediaId":597},"The Anchoring Effect","The anchoring effect refers to a cognitive bias in which we rely too heavily on an initial piece of information, or 'anchor,' to make subsequent judgments. Because the initial information may not be relevant or accurate, this tendency can lead to biased decisions.\n\n ![Graph](image://44c9a549-0a2a-4a15-8582-fc2b93d4f711 \"A used car dealership. Image: order_242 from Chile via Wikimedia\")\n\nAmos Tversky and Daniel Kahneman demonstrated how random, arbitrary numbers can act as anchors in their 1974 study. When subjects spun a wheel to receive a random number, they unknowingly used that number as a reference point for making an unrelated future estimation. This experiment shows that humans are susceptible to the anchoring effect without us even realizing it.\n\nAnchoring is a concept frequently used in negotiations. For example, in used car sales, the initial asking price sets the tone for the rest of the negotiation. This initial price serves as an anchor, influencing the buyer's perception of the car's value and their willingness to negotiate.","b4d75114-f32d-4b8f-a17c-792dc1942206",[599],{"id":600,"data":601,"type":54,"version":25,"maxContentLevel":37},"00de07dc-1fed-4ec8-b250-0da440a6a81e",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":602,"multiChoiceCorrect":604,"multiChoiceIncorrect":606},[603],"Where is the concept of anchoring frequently used?",[605],"In negotiations",[607,608,609],"In cognitive therapy","In educational psychology","In school exams",{"id":611,"data":612,"type":29,"maxContentLevel":37,"version":28,"orbs":615},"083a7618-83e7-4bc8-aa0a-d1363dab8c94",{"type":29,"title":613,"tagline":614},"The Role of Emotions in Economic Decisions","How to move beyond cold calculations in the field of economics.",[616,709],{"id":617,"data":618,"type":28,"version":28,"maxContentLevel":37,"pages":620},"ce57b872-b3d4-45fb-b4fc-9684f4a8529e",{"type":28,"title":619},"Heuristics and Decision Making",[621,638,655,673,691],{"id":622,"data":623,"type":25,"maxContentLevel":37,"version":25,"reviews":627},"322eba8b-c875-4e47-8f87-2a97ed9ea772",{"type":25,"title":624,"contentRole":28,"markdownContent":625,"audioMediaId":626},"Affect Heuristic","It’s easy to be logical when our options are straightforward and we have time to process them. But sometimes our brains take a mental shortcut by relying on our emotional responses to the situation at hand. In cognitive psychology, this shortcut is called the affect heuristic, a term coined by psychologists Paul Slovic, Melissa Finucane, Ellen Peters, and Donald MacGregor.\n\n ![Graph](image://f7380e9f-4b90-421a-9e5e-5105213ed928 \"A portrait of Professor Ellen Peters. Image: Mtusler via Wikimedia\")\n\nResearch on the affect heuristic sheds light on the significant role emotions play in our decision making, particularly when we are faced with complex choices or are under time pressure.\n\nDespite its usefulness in facilitating quick decisions, the affect heuristic can lead to biases in risk assessment. This is because individuals may rely more on their emotional responses rather than conducting an objective analysis of the situation. Ultimately, this can result in decisions that are not necessarily in their best interest.","f897536e-178b-44a4-834e-1bd8a1404ea7",[628],{"id":629,"data":630,"type":54,"version":25,"maxContentLevel":37},"9abe922e-fe49-4d96-9378-25846b1e60ba",{"type":54,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":631,"clozeWords":636},[632,633,634,635],"The affect heuristic is a mental shortcut that uses emotional responses for quick decision-making, which can sometimes lead to biased risk assessments.","The affect heuristic, a mental shortcut, can cause biased risk assessments due to its reliance on emotional responses for swift decisions","Quick decision-making through the affect heuristic, a mental shortcut, may sometimes result in biased evaluations of risk due to emotional responses","The affect heuristic, utilizing emotional responses for rapid decision-making, can occasionally result in skewed risk assessments",[637],"affect heuristic",{"id":639,"data":640,"type":25,"maxContentLevel":37,"version":25,"reviews":644},"a383a421-00cd-4098-a4e6-f61b06893f57",{"type":25,"title":641,"contentRole":28,"markdownContent":642,"audioMediaId":643},"Intuition and Decision Making","Intuition is a powerful tool in decision making, often enabling us to make quick judgments without the need for conscious reasoning. This ability to 'think on one's feet' can be particularly useful in situations where time is of the essence.\n\nIn his book Thinking, Fast and Slow, Daniel Kahneman describes intuition as a product of our \"fast\" thinking system. This system operates automatically and quickly, with little or no effort and no sense of voluntary control, allowing us to make decisions almost instantaneously.\n\n ![Graph](image://0f68de92-3479-48bf-8c65-31e5fdace8ce \"A woman thinking hard before making a decision. Image: Ketut Subiyanto via Pexels\")\n\nHowever, while intuition can be efficient, relying solely on it can lead to cognitive biases and errors in judgment. This is because intuitive decisions are often influenced by our emotions and personal biases, which may not always lead to the most rational or beneficial outcomes.","651dead1-ac5c-42a9-b483-97bb9132be09",[645],{"id":646,"data":647,"type":54,"version":25,"maxContentLevel":37},"a414c46f-eabb-46d3-87fe-73bb4ff97191",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":648,"multiChoiceCorrect":650,"multiChoiceIncorrect":652},[649],"What is intuition useful for in decision making?",[651],"Making quick judgments",[653,317,654],"Long-term planning","Detailed analysis",{"id":656,"data":657,"type":25,"maxContentLevel":37,"version":28,"reviews":661},"92b6e17a-8ab0-45ce-9605-26ec1d4c0ad2",{"type":25,"title":658,"contentRole":28,"markdownContent":659,"audioMediaId":660},"The Sunk Cost Fallacy","Think of a failing product line amidst an array of promising offerings. The manager responsible for making the call to discontinue it may drag out the decision longer than they should have simply because the business has already invested a significant amount of time, money, and effort into the ​project. This is an example of the sunk cost fallacy in practice, and it is one of the ways in which we allow our emotions to reign over logic.\n\n![Graph](image://f81375f3-d13f-447e-abdb-98ff26ce77b5 \"Store manager makes decision to remove product from her shelves. Image: Minette Lontsie, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nWhen we fall prey to the sunk cost fallacy, we become guilty of inefficient resource allocation. It is better to cut off the rot, so to speak, and divert resources into a healthier project with better prospects. Failing to do so can result in significant economic losses and missed opportunities for better investments.\n\nAs humans, we tend to focus on the ‘loss’ of what we have already invested. What we often forget is that we can no longer recover our investment. What we fail to consider is what more we stand to lose should we continue to pour resources into a failed project instead of funneling them into something more worthwhile.","6cd55c14-030e-4bc4-be7a-cf0952a085cd",[662],{"id":663,"data":664,"type":54,"version":25,"maxContentLevel":37},"661be7e6-1de2-4409-8178-da17648f80a4",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":665,"multiChoiceCorrect":667,"multiChoiceIncorrect":669},[666],"What is the sunk cost fallacy?",[668],"Continuing a failed project due to past investment",[670,671,672],"Investing in promising projects","Cutting off a failing project","Efficient resource allocation",{"id":674,"data":675,"type":25,"maxContentLevel":37,"version":25,"reviews":679},"7e8e31e4-e8c6-48c8-970c-25d697b83ac6",{"type":25,"title":676,"contentRole":28,"markdownContent":677,"audioMediaId":678},"The Wisdom of the Crowd and the Bandwagon Effect","The wisdom of the crowd theory suggests that collective judgment can often be more accurate than that of an individual expert. This theory posits that large groups of people collectively have a wide range of information and perspectives, which can lead to more accurate judgments and predictions.\n\nThe wisdom of the crowd phenomenon was first observed by British scientist Sir Francis Galton at a county fair in 1906. Galton found that the average guess of the crowd at the fair was remarkably accurate, even more so than the individual estimates of experts.\n\n ![Graph](image://18378c8a-a24b-464d-9ccb-7afe3ccdd191 \"A portrait of Sir Francis Galton. Image: National Portrait Gallery: NPG 1997 via Wikimedia\")\n\nHowever, an over-reliance on the wisdom of the crowd can also lead to the bandwagon effect, a bias that can lead to groupthink and conformity. This can potentially undermine individual critical thinking and lead to decisions that are not necessarily in the best interest of the individual or the group.","e64d252e-63b7-4bfa-9508-f259b3a1c728",[680],{"id":681,"data":682,"type":54,"version":25,"maxContentLevel":37},"20d40d42-5337-4cd2-9601-bba7e0543da3",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":683,"multiChoiceCorrect":685,"multiChoiceIncorrect":687},[684],"What can over-reliance on the wisdom of the crowd lead to?",[686],"Bandwagon effect",[688,689,690],"Individual critical thinking","Best interest of the group","Accurate judgments",{"id":692,"data":693,"type":25,"maxContentLevel":37,"version":25,"reviews":697},"fc5641b8-132a-4dde-b5f8-ac90dbc189db",{"type":25,"title":694,"contentRole":28,"markdownContent":695,"audioMediaId":696},"Irrational Exuberance and Financial Bubbles","When the wisdom of the crowd isn’t so ‘wise’ but groupthink and conformity still take over, what may result is irrational exuberance, a term coined by former Federal Reserve Board chairman Alan Greenspan. Irrational exuberance refers to unsustainable, speculative behavior in financial markets, and it is often driven by overly optimistic expectations about the future performance of assets.\n\n ![Graph](image://01631556-dc9f-40d9-a694-b9fb0d166f7b \"A portrait of former Federal Reserve Board chairman Alan Greenspan. Image: Bureau of Engraving and Printing via Wikimedia\")\n\nIrrational exuberance can lead to the formation of stock market bubbles, where stock prices inflate beyond their intrinsic value. These bubbles, however, will eventually burst when the market corrects itself.\n\nThe dot-com bubble of the late 1990s and the housing bubble of the mid-2000s are notable examples of asset bubbles fueled by irrational exuberance. In both cases, excessive speculation led to a rapid increase in asset prices, followed by a sudden crash when the bubbles burst, leading to significant financial losses for many investors.","ff39749e-56c0-4d08-aae4-58abb6d9a56d",[698],{"id":699,"data":700,"type":54,"version":25,"maxContentLevel":37},"e6e27ca9-e3c3-493d-b368-6b7fa0114f3e",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":701,"multiChoiceCorrect":703,"multiChoiceIncorrect":705},[702],"What can irrational exuberance lead to?",[704],"Formation of market bubbles",[706,707,708],"Stable market conditions","Decrease in asset prices","Economic growth",{"id":710,"data":711,"type":28,"version":28,"maxContentLevel":37,"pages":713},"bf2f0244-281d-454d-8f20-5b0b25c14a55",{"type":28,"title":712},"Behavioral Economics and Market Dynamics",[714,731,749],{"id":715,"data":716,"type":25,"maxContentLevel":37,"version":25,"reviews":720},"6261361b-872b-4142-87d6-4be1f536d7a9",{"type":25,"title":717,"contentRole":28,"markdownContent":718,"audioMediaId":719},"Limited Time Offers and Fake Urgency","Limited time offers are a common marketing strategy used to create a sense of urgency and spur consumer action. By creating a perception of scarcity, marketers can encourage consumers to make purchases more quickly than they might otherwise.\n\nRobert Cialdini, in his book Influence: The Psychology of Persuasion, discusses the effectiveness of scarcity and urgency in influencing consumer behavior. According to him, these tactics can significantly increase the perceived value of a product or service, making consumers more likely to make a purchase.\n\n ![Graph](image://42b6aadd-1ade-4d8c-aaa1-cb8659aa24c8 \"Robert Cialdini's The Psychology of Persuasion. Image: Jakub Šafránek via Wikimedia\")\n\nWhen it comes to scarcity and shortages, a tiny spark can set off a wildfire. At the beginning of COVID-19 lockdowns in 2020, for example, rumors of potential toilet paper shortages drove crowds into grocery stores to stock up on the product. Shelves could not be restocked quickly enough, and images of empty shelves caused further panic, creating a self-fulfilling prophecy of sorts in the end.","79c26338-ebd0-4750-917a-fb316200ea42",[721],{"id":722,"data":723,"type":54,"version":25,"maxContentLevel":37},"2ec1edda-db2b-412f-8927-d228fc2f55ba",{"type":54,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":724,"clozeWords":729},[725,726,727,728],"Limited time offers are a marketing strategy used to create a sense of urgency and spur consumer action.","Limited time offers utilize urgency as a marketing strategy to prompt consumer action","Urgency is induced by limited time offers to stimulate consumer action in marketing strategies","Marketing strategies often use limited time offers to generate a sense of urgency and encourage consumer activity",[730],"urgency",{"id":732,"data":733,"type":25,"maxContentLevel":37,"version":28,"reviews":737},"20aa5e84-6a11-4df0-a674-cbe08d23a18d",{"type":25,"title":734,"contentRole":28,"markdownContent":735,"audioMediaId":736},"Dopamine and Decision Making","Dopamine a chemical made in the brain, is sent to different parts of the body to transmit signals. Its role in the body encompasses learning, memory, sleep, and mood, among other things.\n\n![Graph](image://4df8974d-c6b0-4c94-a310-3881a36acf5a \"University of California buildings. Image: Coolcaesar at English Wikipedia, CC BY-SA 3.0 \u003Chttp://creativecommons.org/licenses/by-sa/3.0/>, via Wikimedia Commons\")\n\nA study conducted by the University of California, San Francisco, has shed light on the various roles of dopamine, suggesting that dopamine is not merely linked to the pleasure we derive from rewards. Instead, the research findings imply that dopamine might be involved in the actual decision making.\n\nFurther evidence of dopamine's role in decision making comes from a study published in Nature Neuroscience. According to the study,the brain’s dopamine levels can be used as a predictor of an individual’s choices, bolstering the idea that dopamine is an active player in decision making and not just a passive bystander.","93d23cbf-4b12-40ea-a5d9-c12097a5a0bc",[738],{"id":739,"data":740,"type":54,"version":25,"maxContentLevel":37},"e527da4b-5436-4848-b6e8-61f326713823",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":741,"multiChoiceCorrect":743,"multiChoiceIncorrect":745},[742],"What is the role of dopamine in the body?",[744],"Learning, memory, sleep, and mood",[746,747,748],"Digestion, respiration, circulation","Growth, reproduction, immunity","Vision, hearing, taste",{"id":750,"data":751,"type":25,"maxContentLevel":37,"version":25,"reviews":755},"edc10922-dcb6-4c8f-bc03-ef07e59e4661",{"type":25,"title":752,"contentRole":28,"markdownContent":753,"audioMediaId":754},"The Importance of Emotions in Making Economic Decisions"," ![Graph](image://e3a4e98b-4e66-453f-a31a-d5106719be44 \"A person monitoring the stock market with a worried expression on their face. Image: Tima Miroshnichenko via Pexels\")\n\nEmotions affect our judgment, risk perception, and overall decision making. Understanding the dynamics between our emotions and our decision-making processes can provide valuable insights into economic behaviors.\n\nOn an individual level, fear and happiness influence our investment decisions. Fear can lead to risk-averse behavior, while happiness can result in more optimistic and risk-tolerant decisions. \n\nA study from the University of Illinois has taken this concept a step further by suggesting that emotions can influence macroeconomic decisions of nations. This research implies that emotional factors can have far-reaching effects, even influencing economic policymaking. This highlights the importance of considering emotional factors in economic analyses and policymaking, as they can significantly impact the decisions made at both individual and national levels.","2c890d28-f6a8-468e-9e33-107d147459e4",[756],{"id":757,"data":758,"type":54,"version":25,"maxContentLevel":37},"a7983b5e-3540-44af-ac1a-18d660a0339b",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":759,"multiChoiceCorrect":761,"multiChoiceIncorrect":763},[760],"How can fear and happiness influence investment decisions?",[762],"Fear leads to risk-averse behavior, while happiness leads to risk-tolerant decisions",[764,765,766],"Fear leads to risk-tolerant decisions, while happiness leads to risk-averse behavior","Fear leads to happiness, and happiness leads to fear","Fear and happiness have no influence on behavior",{"id":768,"data":769,"type":29,"maxContentLevel":37,"version":28,"orbs":772},"40bd9e36-1655-4f9d-aba4-13be36f3fcd6",{"type":29,"title":770,"tagline":771},"The Limits of Free Choice","How choice is always the result of a complex confluence of factors.",[773,832,891],{"id":774,"data":775,"type":28,"version":25,"maxContentLevel":37,"pages":777},"24bad9b7-e467-4423-b4e6-ba62d54a0215",{"type":28,"title":776},"Social Context and Decision Making",[778,796,814],{"id":779,"data":780,"type":25,"maxContentLevel":37,"version":25,"reviews":784},"27716bf0-10cb-4fd4-8f0e-1f2d7ef65c99",{"type":25,"title":781,"contentRole":28,"markdownContent":782,"audioMediaId":783},"How Social Context Guides Decision Making","Cultural values shape our attitudes and worldviews. The way we perceive wealth and success is largely shaped by the societal context in which we grew up. These values not only shape our life choices but also influence economic policies and practices at a larger scale.\n\n ![Graph](image://7997804c-1961-416e-8ac2-5e6330d5bff8 \"A group of people working together in a field or factory in China. Image: Robert Scoble via Flickr\")\n\nIn collectivist societies like China, decisions are often made with the welfare of the group in mind because cultural norms place a high value on group harmony and collective wellbeing. Thus, economic decisions focus on ensuring the welfare of the entire group – sometimes to the detriment of individuals. This can be seen in the way resources are distributed and economic policies are formulated. There is far less of a taboo in China about the government breaking its citizens’ right to property than in Western cultures.\n\nIn contrast, individualistic societies like the USA often prioritize personal gain when making decisions because individual freedom and personal achievement are a higher priority. As such, economic decisions in these societies are often about maximizing personal gains, sometimes even at the expense of the welfare of the group.","709b98ca-064f-467e-9bcd-ba1ab8acecf7",[785],{"id":786,"data":787,"type":54,"version":25,"maxContentLevel":37},"8e935593-3a74-4edc-9e69-47ea31498e71",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":788,"multiChoiceCorrect":790,"multiChoiceIncorrect":792},[789],"How are decisions made in collectivist societies like China?",[791],"With the welfare of the group in mind",[793,794,795],"Prioritizing personal gain","Maximizing personal gains","Focusing on individual freedom",{"id":797,"data":798,"type":25,"maxContentLevel":37,"version":25,"reviews":802},"bf6e6fbe-929b-40ee-ae80-843468914bf9",{"type":25,"title":799,"contentRole":28,"markdownContent":800,"audioMediaId":801},"How Cultural Values and Norms Affect Decision Making","Besides cultural values, our decision making is also often influenced by everyday unwritten rules or social norms. These norms can be so ingrained in us that we are not even aware that they shape our actions by setting expectations for what is considered acceptable or unacceptable in a given context.\n\nCulture is an important variable when it comes to economic decision making, as suggested by Levinson and Peng in their 2006 article. Their study found cultural differences between Chinese and American participants in terms of how they placed financial value on different objects. This suggests that economic decisions are not just about rational calculations of costs and benefits but also about cultural values and norms.\n\nOther studies have found that some cognitive biases, like the fundamental attribution error and framing effect, are more cultural than universal. These biases, it appears, are not just inherent to human cognition but are also shaped by cultural values and norms.","f5c92c21-5d22-4acd-90cf-2ff0a068ecb9",[803],{"id":804,"data":805,"type":54,"version":25,"maxContentLevel":37},"60a670b4-3e98-4eff-bb49-e69fa988c7b7",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":806,"multiChoiceCorrect":808,"multiChoiceIncorrect":810},[807],"According to some studies in behavioral economics, which cognitive bias is more cultural than universal?",[809],"Fundamental attribution error",[811,812,813],"Endowment effect","Loss aversion","Confirmation bias",{"id":815,"data":816,"type":25,"maxContentLevel":37,"version":25,"reviews":820},"ff961ecb-900a-484b-af28-0ee05ee252f0",{"type":25,"title":817,"contentRole":28,"markdownContent":818,"audioMediaId":819},"Cultural Norms in Daily Life","\n ![Graph](image://6350faee-8037-4f08-8539-b607573cdffb \"Some coins left on a restaurant table as a tip. Image: Adeeto via Wikimedia\")\n\nTipping is considered irrational from the perspective of traditional economics, but most people conform to this practice where it is considered a norm, as in the United States. It is in one’s best economic interest not to leave a tip, but in these countries, tipping is not just about compensating for service. Rather, many people tip service workers to adhere to a social norm that is deeply ingrained in their culture.\n\nLikewise, one does not gain anything monetary when donating to charity. Instead, one receives social approval, a good reputation, and a sense of satisfaction from having done a good deed.\n\nBoth tipping and charity work challenge the traditional economic assumption that people act in their own self-interest. These practices suggest that economic decisions can also be about adhering to cultural norms and values, contributing to the welfare of others, and maintaining a positive social image.","8cbd4512-7ad4-4023-bd33-711f353c38cd",[821],{"id":822,"data":823,"type":54,"version":25,"maxContentLevel":37},"b337e1e6-7e6f-4d03-8d6c-e7a284f82c02",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":824,"multiChoiceCorrect":826,"multiChoiceIncorrect":828},[825],"Why is tipping considered irrational in traditional economics?",[827],"It's not in one’s best economic interest",[829,830,831],"It's a social norm","It's based on subjective measures of satisfaction","It's about compensating for service",{"id":833,"data":834,"type":28,"version":25,"maxContentLevel":37,"pages":836},"dc244a52-67d9-488d-95af-ff20073a2467",{"type":28,"title":835},"Gender and Economic Decisions",[837,855,873],{"id":838,"data":839,"type":25,"maxContentLevel":37,"version":25,"reviews":843},"4bab4904-3932-45ef-bad9-f295bf05c10e",{"type":25,"title":840,"contentRole":28,"markdownContent":841,"audioMediaId":842},"Gender Norms and Economic Decision Making","Gender norms can also impact on a person’s major life choices. For example, whether one continues to work outside or becomes a stay-at-home parent to young kids depends on the support networks and assistance available to them. Furthermore, mothers usually take the role of default parent in most cultures, though stay-at-home dads are slowly becoming more common. \n\nIn addition, women tend to accept lower salaries than their male counterparts. This phenomenon is known as the gender wage gap, and it is more prevalent in some cultures than in others, especially where there is a stronger expectation for men to be their family’s primary breadwinners.\n\n ![Graph](image://68a7a083-6a47-45b9-a06a-17a0cf956eb6 \"A woman working from home while taking care of her child. Image: William Fortunato via Pexels\")\n\nExperts used to believe that men and women tend to approach decision making differently – men are more likely to take risks, and women are more altruistic. But as society gains awareness of gender equality issues, such gender differences may cease to exist, as suggested by a 2022 study conducted in University of Exeter.","aacce69d-61c8-4e1a-ab4a-d3b8cc57554f",[844],{"id":845,"data":846,"type":54,"version":25,"maxContentLevel":37},"4b25c3b5-ed0a-4a4b-a960-7eb5646cecc5",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":847,"multiChoiceCorrect":849,"multiChoiceIncorrect":851},[848],"What is the term for the phenomenon where women tend to accept lower salaries than their male counterparts?",[850],"Gender wage gap",[852,853,854],"Gender bias","Gender inequality","Gender discrimination",{"id":856,"data":857,"type":25,"maxContentLevel":37,"version":25,"reviews":861},"33995881-1627-4b47-ab15-10daf1d70ddd",{"type":25,"title":858,"contentRole":28,"markdownContent":859,"audioMediaId":860},"Fairness and Altruism: The Ultimatum Game","In Werner Guth's Ultimatum Game, one player is given a sum of money to split with another player. The first player can state whatever amount they want to offer the second player. If the second player accepts the offer, both can keep their respective shares. If the second player rejects the offer, neither receives anything. Despite the rational choice being to accept any non-zero offer, many second players reject offers they perceive as unfair.\n\nErnst Fehr and Simon Gächter suggest that there is an element of reciprocity at play in the Ultimatum Game. Players are concerned not just with their own gains but also with the fairness of the offer. If they perceive the offer as unfair, they may reject it in order to ‘punish’ the other player for their unfairness. This suggests that economic decisions are not just about maximizing personal gains but can also be about maintaining fairness.\n\n ![Graph](image://2c8119a6-e4a5-476b-ae7e-e38d7ad8941e \"A portrait of Ernst Fehr. Image: Neuroeconomics University of Zurich via Wikimedia\")\n\nWhat counts as fair depends on many factors, one of which is perceived relative status. People adjust their expectations depending on where they think they stand in the transaction. If a person perceives themselves as having a lower status than the other player, they are more likely to accept an unfair offer.","527e9535-7520-406d-88e8-439e67c334ba",[862],{"id":863,"data":864,"type":54,"version":25,"maxContentLevel":37},"7e2924c3-0a5f-470f-8deb-aa9649569034",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":865,"multiChoiceCorrect":867,"multiChoiceIncorrect":869},[866],"What happens if the second player rejects the offer in the Ultimatum Game?",[868],"Neither receives anything",[870,871,872],"Only the first player gets money","Only the second player gets money","Both get half of the money",{"id":874,"data":875,"type":25,"maxContentLevel":37,"version":25,"reviews":879},"fe3b3f3c-76c4-4345-b8b8-92806617c007",{"type":25,"title":876,"contentRole":28,"markdownContent":877,"audioMediaId":878},"Time Discounting","Time discounting refers to our tendency to prefer immediate rewards over future ones, especially when the time horizon is too long. For instance, people may choose to spend money now rather than save it for the future, even if saving would lead to greater long-term benefits.\n\nImpulsive economic decisions due to time discounting may lead to negative outcomes like financial instability or poor health. For instance, people might engage in risky behaviors like smoking or excessive spending, which harms them in the long term.\n\n ![Graph](image://2f5c2863-8e67-4771-a75c-942053fdb045 \"A woman smoking a cigarette. Image: Susanne Nilsson via Wikimedia\")\n\nTime discounting can be explained by our desire to secure a gain immediately rather than risk losing it in the future, regardless of whether the risk is present or not. This tendency can also be attributed to our lack of self-control.","af488603-a77a-45e7-a405-b53dba2a31e6",[880],{"id":881,"data":882,"type":54,"version":25,"maxContentLevel":37},"2aa15033-9efa-4c6e-9356-c7997ae9493a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":883,"multiChoiceCorrect":885,"multiChoiceIncorrect":887},[884],"What can explain time discounting?",[886],"Desire to secure a gain immediately",[888,889,890],"Desire to secure a gain in the future","Distrust of authority","Desire for risky behaviors",{"id":892,"data":893,"type":28,"version":28,"maxContentLevel":37,"pages":895},"bfe7095d-e016-47a5-ab4c-5583e8b520fc",{"type":28,"title":894},"Time Discounting and Decision Making",[896,914,932],{"id":897,"data":898,"type":25,"maxContentLevel":37,"version":28,"reviews":902},"81902902-7ff7-4368-bc2d-99c90743e115",{"type":25,"title":899,"contentRole":28,"markdownContent":900,"audioMediaId":901},"Temporal Discounting in Real Life","Time discounting is evident in real-life scenarios such as smoking, where individuals trade off long-term health for short-term gratification. Despite the well-known health risks associated with smoking, many people continue to smoke due to the immediate pleasure it provides.\n\n![Graph](image://3688b5d5-c8f8-4233-9ec6-1012703d1d14 \"Person smokes next to sleeping child. Image: U363573053, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nOur perception of benefits and tradeoffs across time is not always linear. Hyperbolic discounting suggests that we are more willing to wait for smaller, more immediate rewards rather than larger but later rewards. We might be willing to wait an extra day for a better outcome, but a full year might be asking too much.\n\nCompanies leverage time discounting by offering delayed payments, providing free shipping past a minimum threshold, or giving free gifts with purchases to encourage immediate buying decisions. By offering immediate rewards, companies can nudge customers to spend more.","ba99c955-0622-41f2-985a-3d9ea41facca",[903],{"id":904,"data":905,"type":54,"version":25,"maxContentLevel":37},"48e86068-8b70-431d-ac75-b6d72cd8e2b2",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":906,"multiChoiceCorrect":908,"multiChoiceIncorrect":910},[907],"What is an example of time discounting in real life?",[909],"Smoking",[911,912,913],"Eating","Sleeping","Reading",{"id":915,"data":916,"type":25,"maxContentLevel":37,"version":28,"reviews":920},"676e1f6c-f9fd-4262-bf75-853340d9b5b2",{"type":25,"title":917,"contentRole":28,"markdownContent":918,"audioMediaId":919},"Decision Fatigue","As we make more decisions, our cognitive resources get depleted, leading to poorer decision-making. This can result in impulsive decisions, reduced self-control, and a tendency to avoid making further decisions. This phenomenon is called decision fatigue.\n\n![Graph](image://ac28d493-d2a7-4e6d-ab66-093605201747 \"A headshot of Steve Jobs. Image: MetalGearLiquid via Wikimedia\")\n\nSteve Jobs' habit of wearing the same outfit every day is a well-known example of a strategy to combat decision fatigue. By reducing the number of decisions he had to make each day, Jobs was able to conserve his cognitive resources for more important decisions.\n\nSimilarly, Apple keeps its suite of products at a manageable range to avoid overwhelming consumers with too much choice, a phenomenon known as choice overload. By limiting the number of options available to consumers, companies avoid subjecting their customers to decision fatigue. This is in the best interests of the business, as an overwhelmed customer may end up purchasing nothing at all.","ee387523-12ca-4a6a-83fb-23de766f7a48",[921],{"id":922,"data":923,"type":54,"version":25,"maxContentLevel":37},"18d979d0-857d-47af-a18a-1b745d19fe12",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":924,"multiChoiceCorrect":926,"multiChoiceIncorrect":928},[925],"What is decision fatigue?",[927],"Poorer decision making due to cognitive resource depletion",[929,930,931],"Being tired of one's life choices","Impulsive decision making","Poor self-control",{"id":933,"data":934,"type":25,"maxContentLevel":37,"version":28,"reviews":938},"10b26137-08f2-437c-ac0e-04862ef3c1a2",{"type":25,"title":935,"contentRole":28,"markdownContent":936,"audioMediaId":937},"How the Paradox of Choice Robs Us of Happiness and Contentment","The paradox of choice suggests that having too many options can lead to dissatisfaction and regret. In the world of dating apps, users are presented with an endless array of potential matches. The illusion of limitless choice can make it difficult for users to commit to a relationship, as they may feel they can always find a better option.\n\nWith more choice comes the fear of making the wrong decision. This fear can be exacerbated by the belief that others might have made a better choice, triggering a fear of missing out. This can lead to dissatisfaction and regret, even if the chosen option is objectively good.\n\n![Graph](image://03d54cdc-4765-4737-b406-3a573e2b43a4 \"A person using a dating app. Image: Santeri Viinamäki via Wikimedia.\")\n\nToo much choice can also lead to paralysis, especially for those who are indecisive. When faced with too many options, individuals may struggle to make a decision, leading to inaction. This can have unfortunate consequences when the decision is an important one, such as choosing a medical treatment.","9d845640-edd1-4a06-9591-11ee8ff660c7",[939],{"id":940,"data":941,"type":54,"version":25,"maxContentLevel":37},"7fe99c12-2744-4ce2-bb17-394884b95035",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":942,"multiChoiceCorrect":944,"multiChoiceIncorrect":946},[943],"What does the paradox of choice suggest?",[945],"Too many options can lead to dissatisfaction and regret",[947,948,949],"More options lead to better decisions","Choice is always beneficial","Limitless options lead to happiness",{"id":951,"data":952,"type":29,"maxContentLevel":37,"version":28,"orbs":955},"b91988ad-3cf9-41f5-b585-f76984329d36",{"type":29,"title":953,"tagline":954},"The Power of Nudge","The subtle art of influencing people's choices.",[956,1049,1108],{"id":957,"data":958,"type":28,"version":28,"maxContentLevel":37,"pages":960},"9d5a6d2e-d31f-4a6d-a625-44d003d1a308",{"type":28,"title":959},"Introduction to Nudge Theory",[961,978,996,1013,1031],{"id":962,"data":963,"type":25,"maxContentLevel":37,"version":28,"reviews":967},"3d35f062-2ca9-4b40-89c0-586771ee46b7",{"type":25,"title":964,"contentRole":28,"markdownContent":965,"audioMediaId":966},"Introducing Nudge Theory","Richard Thaler and Cass Sunstein introduced the concept of “nudge” in their 2008 book, Nudge: Improving Decisions About Health, Wealth, and Happiness. The book explores the idea of subtly influencing people's decisions and behaviors in a way that improves their overall wellbeing. This concept has since gained traction in various fields, including economics, psychology, and public policy.\n\n![Graph](image://55076e09-7b94-4974-a1fe-f82dbeb937df \"Professor Richard H Thaler. Image: Chatham House London via Wikimedia.\")\n\nTraditional economics has long relied on providing information, imposing regulations, and using taxation and incentives to change human behavior. These methods are based on employing logic, forbidding certain behaviors, and altering economic consequences, respectively. However, these approaches often overlook the complexities of human decision making.\n\nNudge theory offers a different approach. It proposes subtly redirecting behavior using nudges, which change the context in which choices are made. A key aspect of this theory is that it maintains a person’s freedom of choice while gently guiding them towards making better decisions.","6da55ae5-2508-48d3-89ea-c8c20cfd9f65",[968],{"id":969,"data":970,"type":54,"version":25,"maxContentLevel":37},"ddb8b20d-d7cb-49d1-92ee-1784d1b4c34d",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":971,"multiChoiceCorrect":973,"multiChoiceIncorrect":975},[972],"Who introduced the concept of 'nudge'?",[974],"Richard Thaler and Cass Sunstein",[976,211,977],"Daniel Kahneman and Amos Tversky","John Maynard Keynes",{"id":979,"data":980,"type":25,"maxContentLevel":37,"version":28,"reviews":984},"9ef32124-df0e-4120-b4e3-68c9c4f5318b",{"type":25,"title":981,"contentRole":28,"markdownContent":982,"audioMediaId":983},"The Reasoning Behind Nudge","Thaler and Sunstein argue that nudges should be designed to encourage behaviors that are in people’s own best interests. This means nudging people towards the choices they would have made had they not been affected by cognitive biases and other influences that can cloud judgment.\n\nThe concept of nudges is rooted in libertarian paternalism. This approach encourages behavior in the actor’s self-interest without removing their freedom of choice. It respects individual autonomy while also acknowledging that people sometimes need a gentle push in the right direction.\n\nFurthermore, Thaler and Sunstein believe that it should be easy and cheap for a decision maker to ignore nudges. This ensures that the freedom of choice is preserved and that nudges do not become coercive or overly intrusive.","6695e28a-8f0f-4ee5-93ca-2c22058539af",[985],{"id":986,"data":987,"type":54,"version":25,"maxContentLevel":37},"1bfe52dc-9437-4397-8942-731fa27f13a5",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":988,"multiChoiceCorrect":990,"multiChoiceIncorrect":992},[989],"What do Thaler and Sunstein believe about ignoring nudges?",[991],"It should be easy and cheap",[993,994,995],"It should be difficult and costly","It should be discouraged","It should be penalized",{"id":997,"data":998,"type":25,"maxContentLevel":37,"version":28,"reviews":1002},"b42a23fd-ddb9-4627-9198-782c5c499799",{"type":25,"title":999,"contentRole":28,"markdownContent":1000,"audioMediaId":1001},"Hard Measures Versus Soft Measures","In situations where certain behaviors are harmful to society, hard measures are often preferable. For instance, during the Covid-19 pandemic, lockdowns were implemented as a hard measure to control the spread of the virus.\n\n![Graph](image://a71e3c33-22f6-4aff-a505-915f8521c325 \"The piano stairs experiment by Volkswagen Sweden. Image: Victor Aguirre-Lopez via Wikimedia.\")\n\nHowever, when the goal is to encourage healthier eating habits or discourage smoking, hard measures may be inappropriate and difficult to implement. In these cases, soft measures, such as nudges, can be more effective. These subtly guide people towards better choices without imposing strict rules or penalties.\n\nAn example of a soft measure is the piano stairs experiment that Volkswagen Sweden ran at the Odenplan metro station in Stockholm. The campaign transformed the station’s stairs into a working piano, making it more enjoyable to climb the stairs. This encouraged people to choose them over the escalator. So though we cannot force people to make certain choices, we can indeed create an environment that makes the desired behavior more appealing.","ff5a6357-8ac6-43ac-aae9-a71c3fe7b97f",[1003],{"id":1004,"data":1005,"type":54,"version":25,"maxContentLevel":37},"6eda5709-0fa3-423f-b080-aacba5691a28",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1006,"multiChoiceCorrect":1008,"multiChoiceIncorrect":1010},[1007],"What is often preferable in situations where certain behaviors are harmful to society?",[1009],"Hard measures",[1011,230,1012],"Soft measures","More education",{"id":1014,"data":1015,"type":25,"maxContentLevel":37,"version":28,"reviews":1019},"e0970e78-dbdd-41bf-a3db-c7322fc1e9bb",{"type":25,"title":1016,"contentRole":28,"markdownContent":1017,"audioMediaId":1018},"Types of Nudges","One type of nudge is the default option, which allows consumers to opt out of certain behaviors rather than having to opt in. The idea is that most people prefer to go with the flow and choose inaction in many circumstances. Setting a desired behavior as the default option leverages people’s preference for the path of least resistance.\n\n![Graph](image://90f351bf-1124-4a17-8463-2aa17c6e51ae \"A woman eating food on a smaller plate. Image: via Greta Hoffman\")\n\nWith choice architecture, we change the environment in which choices are made. For example, eating from a smaller plate usually prompts us to eat smaller portions of food. This subtle change in the environment can help people make healthier choices without feeling like they are being forced to do so.\n\nPrecommitments are another form of nudge. They involve individuals committing to their goals in advance, either by blocking out certain options in the future or by imposing additional costs or consequences to future choices. This can help individuals stick to their goals and make better decisions in the long run.","58c543e9-3cfa-4159-97f7-26e1e7f27b71",[1020],{"id":1021,"data":1022,"type":54,"version":25,"maxContentLevel":37},"016d1000-5e21-49b1-bb41-10b800f03e32",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1023,"multiChoiceCorrect":1025,"multiChoiceIncorrect":1027},[1024],"What is one type of nudge?",[1026],"The default option",[1028,1029,1030],"The forced option","The only option","The multiple option",{"id":1032,"data":1033,"type":25,"maxContentLevel":37,"version":28,"reviews":1037},"dfc08c6f-532a-4ce0-8e22-3e64844f3262",{"type":25,"title":1034,"contentRole":28,"markdownContent":1035,"audioMediaId":1036},"Why Nudges Can Be Effective, in Theory","Nudges can be effective because they take advantage of cognitive biases instead of using a 'hard sell' approach. They cater to humans' innate predispositions, making them more likely to be accepted and followed.\n\nNudges also allow people to take the path of least resistance. They remove friction from the direction of desirable behaviors and create friction where behaviors are undesirable. This makes it easier for people to make better choices without feeling like they are being coerced or controlled.\n\nThat said, the effectiveness of nudges can vary depending on the context. Food choice is one area where nudges have been found to be particularly impactful, but other areas may require different approaches, as in Covid-19 lockdowns and safety measures.\n\n![Graph](image://6dc545c9-2505-49a9-b530-1ef8a3c0e136 \"Covid-19 sign on a bench. Image: DiplomatTesterMan, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")","2dcaa6eb-09bd-4372-9816-6e8048ece6d0",[1038],{"id":1039,"data":1040,"type":54,"version":25,"maxContentLevel":37},"fe4f6c28-b61a-4b6a-95b6-7351f45f3b86",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1041,"multiChoiceCorrect":1043,"multiChoiceIncorrect":1045},[1042],"What do nudges allow people to do?",[1044],"Take the path of least resistance",[1046,1047,1048],"Make difficult choices","Honor their preferences","Resist change",{"id":1050,"data":1051,"type":28,"version":28,"maxContentLevel":37,"pages":1053},"26bf7751-b852-42bd-bc3b-9c93c33aeca9",{"type":28,"title":1052},"Applications of Nudge Theory",[1054,1072,1090],{"id":1055,"data":1056,"type":25,"maxContentLevel":37,"version":28,"reviews":1060},"28f94125-f8a7-4b6c-9a42-45d7b6d65821",{"type":25,"title":1057,"contentRole":28,"markdownContent":1058,"audioMediaId":1059},"Nudges in Daily Life","Retailers often use nudges to influence consumer behavior. For example, in supermarkets, items placed at eye level are more likely to be noticed and purchased by consumers, hence the saying ‘eye level is buy level.’ This principle is also applied to children's items, which are often placed closer to the ground, at their eye level.\n\n![Graph](image://7274297e-2ed6-4102-877b-b1afb3996e0d \"A supermarket's 'eye level is buy level.’ principle. Image: Tianwang Xiao via pexels.\")\n\nSellers use all sorts of nudges to give customers just that little push to making their purchase. Limited time offers create a sense of urgency, freebies leverage our desire for instant gratification, and glowing reviews and testimonials provide social proof of a product's desirability.\n\nPush notifications are another common nudge in our daily lives. They ensure that users are constantly reminded of certain applications or tasks, encouraging them to engage more with the app on their phone. This can increase app usage and engagement, benefiting both the user and the app developer.","649756cc-83c9-4ec6-aeaa-3d0f1724f1d6",[1061],{"id":1062,"data":1063,"type":54,"version":25,"maxContentLevel":37},"72229265-101a-4f1b-9c1b-60c487cfcd45",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1064,"multiChoiceCorrect":1066,"multiChoiceIncorrect":1068},[1065],"What is the principle behind placing items at eye level in supermarkets?",[1067],"Eye level is buy level",[1069,1070,1071],"Higher is better","Visibility is key","Center is attention",{"id":1073,"data":1074,"type":25,"maxContentLevel":37,"version":28,"reviews":1078},"db1e1f03-b55c-4b28-9eda-27244275ce1c",{"type":25,"title":1075,"contentRole":28,"markdownContent":1076,"audioMediaId":1077},"Nudges in Policymaking","The application of nudge theory in policymaking is best seen with the UK government's Behavioural Insights Team, unofficially known as the UK's \"Nudge Unit.\" This team has implemented programs relating to tax compliance, reducing unemployment, and encouraging organ donation, among others.\n\n![Graph](image://d1534bf9-f7a7-4c0d-8c61-800ebd296ac5 \"SMS reminders for appointments. Image: Silenzefx via Wikimedia.\")\n\nIn Australia, the use of SMS reminders for hospital appointments has been a successful nudge strategy. This simple reminder reduced missed appointments at St Vincent's Hospital by 19%, saving the hospital 200,000 Australian dollars.\n\nIn certain EU countries, individuals are automatically enrolled to be organ donors, with the ability to opt out. This default nudge has significantly increased organ donation rates, demonstrating the power of nudges in influencing public behavior.","3eb363f8-a77c-4cf6-b990-4e14e9da7656",[1079],{"id":1080,"data":1081,"type":54,"version":25,"maxContentLevel":37},"9367f6f3-3d0e-40e1-a10b-599643513d85",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1082,"multiChoiceCorrect":1084,"multiChoiceIncorrect":1086},[1083],"What effect did automatic enrollment for organ donation have in certain EU countries?",[1085],"Significantly increased organ donation rates",[1087,1088,1089],"Decreased organ donation rates","No significant change","Increased hospital revenue",{"id":1091,"data":1092,"type":25,"maxContentLevel":37,"version":28,"reviews":1096},"1ac7ad1c-295b-419b-a9e1-921fbdda2c75",{"type":25,"title":1093,"contentRole":28,"markdownContent":1094,"audioMediaId":1095},"Challenges to Effective Nudging","Several frameworks have been developed to guide the creation of effective nudges in the public sphere. These include the UK Behavioral Insight Team's MINDSPACE model and EAST framework, and Susan Michie's COM-B model. These frameworks provide a structured approach to designing and implementing nudges.\n\n![Graph](image://5797a837-149e-4474-a75b-88b88fbd912b \"An example of A/B testing. Image: Maxime Lorant via Wikimedia. \")\n\nDespite the availability of these frameworks, the messaging used in nudges needs to be carefully tested for maximum effectiveness. A/B testing can help identify the most effective messages and strategies, as there is no one-size-fits-all formula for nudging.\n\nNudge theory has been affected by psychology's replicability crisis. Some studies that initially showed promising results have failed to be replicated, raising questions about the reliability of the initial findings and the effectiveness of certain nudges.","f4c4964c-c310-4a56-9306-f2dd586f6a58",[1097],{"id":1098,"data":1099,"type":54,"version":25,"maxContentLevel":37},"13ae06d3-15a4-41ac-be18-eb60b0bb4bb5",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1100,"multiChoiceCorrect":1102,"multiChoiceIncorrect":1104},[1101],"What is commonly used to test the effectiveness of nudges?",[1103],"A/B testing",[1105,1106,1107],"Isolation Effect","Prospect Theory","Cognitive processes",{"id":1109,"data":1110,"type":28,"version":28,"maxContentLevel":37,"pages":1112},"0ad14b52-4bf7-43f6-9172-26181b0be83c",{"type":28,"title":1111},"Criticisms and Challenges of Nudge Theory",[1113,1131],{"id":1114,"data":1115,"type":25,"maxContentLevel":37,"version":28,"reviews":1119},"13e9dae8-83f0-41db-aa3e-0636457d3dcb",{"type":25,"title":1116,"contentRole":28,"markdownContent":1117,"audioMediaId":1118},"Criticisms Against Nudge Theory","Nudge theory has not been without its critics. Some, like Daniel Hausman and Brynn Welch, question the morality of manipulating individuals' decision making. They argue that nudges can infringe on individual autonomy and personal freedom, even if they are designed to promote beneficial behaviors.\n\n![Graph](image://e0e1b599-fb93-4683-ad84-4a532ab3b90d \"Psychologist Nichola Raihani. Image: Jake Fairnie via Wikimedia.\")\n\nCritics also question whether nudges truly make choosers better off 'as judged by themselves,' as Thaler and Sunstein claim. They argue that the judgement is often made by the choice architect, not the chooser. This, they say, turns libertarian paternalism into a form of nanny state paternalism.\n\nPsychologist Nichola Raihani also notes that the effectiveness of nudge interventions may vary across contexts. What works well in one situation or with one group of people may not work well in other situations or with a different group of people. This highlights the need for careful consideration and testing of nudges before they are implemented.","efc7e7a4-2a25-470b-9a6a-67a9bd7e3e9f",[1120],{"id":1121,"data":1122,"type":54,"version":25,"maxContentLevel":37},"58691f22-cd78-4305-81e3-c878a34607b5",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1123,"multiChoiceCorrect":1125,"multiChoiceIncorrect":1127},[1124],"What can nudges infringe on according to critics?",[1126],"Individual autonomy and personal freedom",[1128,1129,1130],"Public health","Financial stability","Environmental conservation",{"id":1132,"data":1133,"type":25,"maxContentLevel":37,"version":28,"reviews":1137},"2efe144d-dd27-43e2-901b-4dfb5c0d43c9",{"type":25,"title":1134,"contentRole":28,"markdownContent":1135,"audioMediaId":1136},"More Criticisms and Questions for Nudge Theory","Stephen Reicher argues that focusing on personal responsibility through nudges can become an excuse for government inaction. Instead of addressing systemic issues, governments may use nudges to shift the responsibility onto individuals.\n\nThere are also concerns that nudges and psychological tricks can be used for malignant purposes, not for the betterment of individuals. This raises ethical questions about the use of nudges and the need for oversight and regulation.\n\nFinally, the subjective nature of wellbeing and happiness poses a challenge for nudge theory. People often make choices based on social comparison, not on what will truly make them better off.\n\nAnd sometimes, our true preferences don’t always reflect what's best for us, like when one prefers to eat ice cream instead of salad. At the end of the day, human decision making is complex and not always rational. This presents a formidable challenge to nudge theory.\n\n![Graph](image://f0fffe01-d6f5-42cf-87b0-2ff5b26355c0 \"Fruit and biscuit options. Image: Tim Gouw punttim, CC0, via Wikimedia Commons\")","6f8c079a-d960-48f2-b387-7ae59023d95f",[1138],{"id":1139,"data":1140,"type":54,"version":25,"maxContentLevel":37},"a18b04e3-0a30-492f-a277-f8063744b008",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1141,"multiChoiceCorrect":1143,"multiChoiceIncorrect":1145},[1142],"What can focusing on personal responsibility through nudges become an excuse for?",[1144],"Government inaction",[1146,1147,1148],"Individual laziness","Corporate greed","Societal apathy",{"id":1150,"data":1151,"type":29,"maxContentLevel":37,"version":28,"orbs":1153},"3c39bccc-e622-477c-90f9-264462709062",{"type":29,"title":1106,"tagline":1152},"How humans evaluate gains and losses differently",[1154,1230],{"id":1155,"data":1156,"type":28,"version":28,"maxContentLevel":37,"pages":1158},"81c8e3b1-e57d-4766-a302-8788a8778428",{"type":28,"title":1157},"Understanding Prospect Theory",[1159,1177,1195,1213],{"id":1160,"data":1161,"type":25,"maxContentLevel":37,"version":28,"reviews":1165},"964c508f-6fbc-409f-a124-c6c11ceb7c07",{"type":25,"title":1162,"contentRole":28,"markdownContent":1163,"audioMediaId":1164},"Introducing Prospect Theory","Imagine a scenario where you bet $10 on a baseball game and lose to a friend. The loss of $10 is not just a monetary loss, but also a psychological one. The disappointment of losing, the regret of the decision, and the comparison of what could have been if the bet was won, all contribute to the overall negative experience.\n\nSuppose your friend offers you a chance to win your money back. You can either take a sure win of $5, or a 50% chance to win the full $10 back. According to prospect theory, most people would choose the sure win, even though the expected value of both options is the same. This is due to the certainty effect, where people prefer certain outcomes over uncertain ones.\n\n![Graph](image://f139e609-7c4b-4c81-8d21-bcff5c70873d \"Disappointed man at desk. Image: LaurMG., CC BY-SA 3.0 \u003Chttps://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons\")\n\nSuppose your friend frames the options differently. Instead of saying that you’ll recoup $5, guaranteed, he presents the option as a $5 net loss. Even though the outcomes are the same, the framing of the options can significantly influence your decision. This is the framing effect, another key element of prospect theory.","a5a213a5-1bc9-400b-bd5a-6ab12c87ed82",[1166],{"id":1167,"data":1168,"type":54,"version":25,"maxContentLevel":37},"818cebef-587a-46d1-b515-6a8e9164eb46",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1169,"multiChoiceCorrect":1171,"multiChoiceIncorrect":1173},[1170],"According to prospect theory, what would most people choose?",[1172],"The sure win",[1174,1175,1176],"The uncertain win","The largest gain","The low risk",{"id":1178,"data":1179,"type":25,"maxContentLevel":37,"version":28,"reviews":1183},"c369078d-b962-414b-92fa-f59dcee01bbc",{"type":25,"title":1180,"contentRole":28,"markdownContent":1181,"audioMediaId":1182},"Explaining Prospect Theory","Developed by Daniel Kahneman and Amos Tversky, prospect theory is a behavioral economic theory that describes how people make decisions under uncertainty. It focuses on four elements that affect economic decision making: certainty, framing, loss aversion, and relativity.\n\n![Graph](image://0546cd4d-3637-4986-9553-f24b1ed8f317 \"Daniel Kahneman. Image: Buster Benson via flickr\")\n\nCertainty refers to our preference for guaranteed outcomes over uncertain ones. When offered a sure $10 or a 25% chance at $50, most people would choose the former. This is because the majority of us prefer a sure gain over a gamble with a higher expected value.\n\nThe second element, framing, relates to the way options and information are presented. The same option may appear more appealing when framed in one way compared to another. For example, people are more likely to choose a surgery if it is described as having a 90% survival rate rather than a 10% mortality rate, even though the two descriptions represent the same outcome.","869933ad-0e28-4827-b799-f2c59a48bb89",[1184],{"id":1185,"data":1186,"type":54,"version":25,"maxContentLevel":37},"3348f3d4-ae88-4585-87db-2c929519cf6f",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1187,"multiChoiceCorrect":1189,"multiChoiceIncorrect":1191},[1188],"What does framing in prospect theory relate to?",[1190],"How options and information are presented",[1192,1193,1194],"How decisions are made","How risks are assessed","How outcomes are evaluated",{"id":1196,"data":1197,"type":25,"maxContentLevel":37,"version":28,"reviews":1201},"dc131a39-d27f-4d43-b2c4-0a64f4c036ec",{"type":25,"title":1198,"contentRole":28,"markdownContent":1199,"audioMediaId":1200},"The Implications of Loss Aversion","The third element of prospect theory, loss aversion, refers to our tendency to prefer avoiding losses to acquiring equivalent gains. This is because losses are felt more intensely than gains of the same value. When we lose $20, the disappointment we feel is greater than the joy we might experience from finding $20 randomly.\n\n![Graph](image://ac87d24d-bef0-403b-afe0-7da30d159d8c \"Man sat frustrated alongside colleagues. Image: Evgeny Tchebotarev, CC BY 3.0 \u003Chttps://creativecommons.org/licenses/by/3.0>, via Wikimedia Commons\")\n\nLoss aversion has significant implications in behavioral finance. It explains why some investors tend to be overly conservative, focusing more on minimizing losses than on maximizing gains. Even when they can afford to take on more risk, the fear of potential losses can deter them from making profitable investments.\n\nIn the stock market, loss aversion can lead to premature selling of stocks. Investors may sell their stocks to realize a small gain, even when holding onto the stocks could lead to much larger profits. This behavior is driven by the desire to avoid the potential loss that comes with uncertainty. A bird in the hand is worth two in the bush, so to speak.","30b85166-726c-4de4-b23c-105b7325b0b9",[1202],{"id":1203,"data":1204,"type":54,"version":25,"maxContentLevel":37},"1a18234d-c39f-4acf-81f6-f78a7f31c14e",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1205,"multiChoiceCorrect":1207,"multiChoiceIncorrect":1209},[1206],"What can loss aversion lead to in the stock market?",[1208],"Premature selling of stocks",[1210,1211,1212],"Preference for low-priced stocks","Buying more stocks","Ignoring the stock market altogether",{"id":1214,"data":1215,"type":25,"maxContentLevel":37,"version":28,"reviews":1219},"325bb151-7b4d-40d7-b423-573d36ae1cd8",{"type":25,"title":1216,"contentRole":28,"markdownContent":1217,"audioMediaId":1218},"Loss Aversion and Other Cognitive Biases","Loss aversion can also lead to other cognitive biases. For example, a gambler suffering from a losing streak may continue to place bets in an attempt to recoup his losses. This tendency, known as the sunk cost fallacy, contradicts the concept of sunk cost in conventional economics, which suggests that past investments should not affect future decisions as they can no longer be recovered.\n\n![Graph](image://36b55417-2fd7-4e02-9edf-0d6550024cea \"Gamblers sitting back-to-back using slot machines. Image: Tomi Mäkitalo, CC BY-SA 3.0 \u003Chttps://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons\")\n\nThe sunk cost fallacy refers to our tendency to continue a course of action even when it would be better to abandon it. This can lead to irrational decisions, as we may stick to a losing strategy simply because we are emotionally attached to the investments we have already made.\n\nLoss aversion also partly explains the endowment effect, a cognitive bias where people place a higher value on items if they own it compared to if they do not. This is because the potential loss of giving up an item is perceived as greater than the potential gain of acquiring it.","e7700341-f9f2-4059-8e3a-3b0b51f19c36",[1220],{"id":1221,"data":1222,"type":54,"version":25,"maxContentLevel":37},"d9db550f-16ec-4dcf-9d8e-77a8c8a39b03",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1223,"multiChoiceCorrect":1224,"multiChoiceIncorrect":1226},[666],[1225],"Continuing a course of action despite losses",[1227,1228,1229],"Ignoring past investments","Making rational decisions","Abandoning a losing strategy",{"id":1231,"data":1232,"type":28,"version":28,"maxContentLevel":37,"pages":1234},"b493d062-148b-41d1-a05f-eaacc73fc14e",{"type":28,"title":1233},"Applications of Prospect Theory",[1235,1253,1270,1287],{"id":1236,"data":1237,"type":25,"maxContentLevel":37,"version":28,"reviews":1241},"fd117f25-c83b-4e87-9754-7cf69de738c6",{"type":25,"title":1238,"contentRole":28,"markdownContent":1239,"audioMediaId":1240},"Reference Points in Prospect Theory","Imagine two individuals. Bob has tens of thousands in debt. Joe has none but lives paycheck to paycheck. Who is more likely to be devastated by a $100 loss? According to prospect theory, it’s Joe. Losing $100 is just enough to land Joe in the red but won’t make much of an impact on Bob’s finances.\n\nSimilarly, consider Cynthia, who earns $50,000 a year, and Michelle, who earns four times as much. Who is more likely to appreciate a $5,000 raise? Again, according to prospect theory, it should be Cynthia, as a $5,000 raise represents a larger percentage increase for her. Michelle already earns enough. Past a certain point, additional income does not significantly increase happiness, a concept known as diminishing marginal utility.\n\n![Graph](image://68fbc21f-ae7c-4dea-83d5-dd0340b1d2d3 \"Woman receiving news of her raise. Image: Yemi festus, CC0, via Wikimedia Commons\")\n\nThese two examples illustrate the fourth element of prospect theory – reference points. According to the theory, we do not judge potential gains and losses in absolute terms. Instead, we view gains and losses relative to reference points, which can be arbitrary. The value of $100 differs from context to context depending on our reference point.","956ee84f-e434-4235-8b9a-6023082627fe",[1242],{"id":1243,"data":1244,"type":54,"version":25,"maxContentLevel":37},"bb31033c-0d8c-4a01-8e17-9d81fe6c30b0",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1245,"multiChoiceCorrect":1247,"multiChoiceIncorrect":1249},[1246],"What does prospect theory suggest we judge gains and losses relative to?",[1248],"Reference points",[1250,1251,1252],"Absolute terms","Number of children","Amount of debt",{"id":1254,"data":1255,"type":25,"maxContentLevel":37,"version":25,"reviews":1259},"9554f758-66d4-48d9-b2b1-1e3d9452d602",{"type":25,"title":1256,"contentRole":28,"markdownContent":1257,"audioMediaId":1258},"The Value of Prospect Theory","\nDespite the dominance of expected utility theory in conventional economics, prospect theory has gained widespread respect. It provides a more realistic picture of how people make decisions under uncertainty, taking into account psychological factors that traditional economic models often ignore.\n\n ![Graph](image://f1fbe0d6-4f81-43bd-b133-1e5bd11b8493 \"A depiction of the Prospect Theory. Image: Laurenrosenberger via Wikimedia.\")\n\nProspect theory offers a simple, straightforward framework for understanding economic decision making. It highlights the importance of certainty, framing, loss aversion, and reference points in shaping our choices. This makes it a valuable tool for economists, policymakers, and anyone interested in understanding human behavior.\n\nMoreover, prospect theory can guide how options are presented to others. By understanding how people evaluate potential gains and losses, we can frame options in a way that influences decisions. This can be particularly useful in fields like marketing, negotiation, and policy design.","06ae33d8-8127-4f58-bf1d-e9208083e22f",[1260],{"id":1261,"data":1262,"type":54,"version":25,"maxContentLevel":37},"60efba22-8800-4085-99ee-014637d5b8c9",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1263,"multiChoiceCorrect":1265,"multiChoiceIncorrect":1267},[1264],"Where traditional economics has expected utility theory as an elegant way of modeling economic behavior, what is its closest equivalent in behavioral economics?",[1266],"Prospect theory",[686,1268,1269],"Wisdom of the crowd theory","Nudge theory",{"id":1271,"data":1272,"type":25,"maxContentLevel":37,"version":25,"reviews":1276},"687d4a81-1def-4a34-b4a5-7a1296f5abe7",{"type":25,"title":1273,"contentRole":28,"markdownContent":1274,"audioMediaId":1275},"Building on Prospect Theory","Recent research has built on prospect theory to further our understanding of decision making. One such study suggests that the behaviors illustrated in prospect theory are more prevalent in decisions and scenarios that we rarely encounter. As we gain experience and new information, we assess past choices and refine our thought process, effectively making our decision making more ‘rational.’\n\nThe more we encounter the same scenario, the more our decisions align with the predictions of expected utility theory. This suggests that familiarity can reduce the influence of cognitive biases as we learn from past experience.\n\n ![Graph](image://84f5e6e6-064f-4673-bd93-f4cffe47255e \"Professor Matthew Joel Rabin. Image: via Wikimedia.\")\n\n\nOne limitation of prospect theory is that it does not specify how reference points are determined. A 2006 paper by Botond Kőszegi and Matthew Rabin suggests that reference points are determined by our expectations of the economic outcomes of our choices. However, theorists have not reached a consensus, uncovering an extra layer of complexity to our understanding of decision making under uncertainty.","417f4466-f5e9-4c42-bfae-32e5bb6be8e0",[1277],{"id":1278,"data":1279,"type":54,"version":25,"maxContentLevel":37},"a8aa146d-cb7c-4717-a6f1-6493bc77fc65",{"type":54,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1280,"clozeWords":1285},[1281,1282,1283,1284],"One limitation of prospect theory is that it does not specify how reference points are determined.","Prospect theory's limitation is its lack of clarity on how reference points are established","The way reference points are determined is not specified, which is a limitation of prospect theory","Prospect theory falls short in defining how reference points are determined",[1286],"reference points",{"id":1288,"data":1289,"type":25,"maxContentLevel":37,"version":28,"reviews":1293},"75f29873-2d6f-4c83-9732-4dd48f3e2569",{"type":25,"title":1290,"contentRole":28,"markdownContent":1291,"audioMediaId":1292},"Prospect Theory in Other Domains","Since its introduction, prospect theory has been applied in domains beyond economics. In geriatric care, studies have found that relatives of residents diagnosed with cancer frame medical decisions within the larger context of the resident's life. They conclude that jeopardizing the chance for a peaceful dying process is too high a risk, demonstrating the influence of framing and loss aversion.\n\n![Graph](image://56c01d5d-fef7-491b-b9d3-15aa0bae73ae \"Doctor discusses an x-ray with a couple. Image: Rhoda Baer (Photographer), Public domain, via Wikimedia Commons\")\n\nPolitical scientist Kurt Weyland has also used prospect theory to understand political decision making. According to him, political leaders at the height of their power do not take on risky initiatives. This observation aligns with the principles of loss aversion.\n\nWeyland further suggests that in Latin America, politically weakened governments were more likely to take political risks in the form of potentially unpopular reforms despite the very real chance of political backlash. Again, this counterintuitive behavior lines up with prospect theory, particularly with the idea of assessing options from varying reference points.","d36363d0-4631-494f-b026-f1c0f43fd1a3",[1294],{"id":1295,"data":1296,"type":54,"version":25,"maxContentLevel":37},"0d5f8503-664f-4090-abe2-f526fcea67ef",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1297,"multiChoiceCorrect":1299,"multiChoiceIncorrect":1301},[1298],"What behavior does Kurt Weyland observe in political leaders at the height of their power?",[1300],"Avoidance of risky initiatives",[1302,1303,1304],"Taking political risks","Stubbornness and grandiosity","Political backlash",{"id":1306,"data":1307,"type":29,"maxContentLevel":37,"version":28,"orbs":1310},"3e00a8a7-c564-40f1-a0e7-316ecef3c548",{"type":29,"title":1308,"tagline":1309},"Exploring Real-World Phenomena with Behavioral Economics","How to apply the principles we have learned about to real-world problems",[1311,1385],{"id":1312,"data":1313,"type":28,"version":28,"maxContentLevel":37,"pages":1315},"3db93089-d89a-436d-ace2-4f9bffa5be9a",{"type":28,"title":1314},"Theoretical and Practical Market Dynamics",[1316,1334,1351,1368],{"id":1317,"data":1318,"type":25,"maxContentLevel":37,"version":25,"reviews":1322},"6ff605b3-53d0-4a12-9423-ebad972e15e9",{"type":25,"title":1319,"contentRole":28,"markdownContent":1320,"audioMediaId":1321},"Efficient Markets, in Theory","Traditional economic theory asserts that markets are efficient, or that asset prices accurately reflect their intrinsic value. That is to say, if a piece of land sells for $400,000, that’s because the land is actually worth that much. \n\nThis belief is rooted in the assumption that market participants are rational and have access to all relevant information, which then allows them to make optimal economic decisions. In this view, any ‘inefficiencies’ are quickly corrected, as investors take advantage of market errors.\n\n ![Graph](image://8adf3619-1149-4ecb-9c72-e3457f07e12d \"A depiction of the stock market. Image: Investorsnewstips01 via Wikimedia.\")\n\n\nHowever, real-world observations often contradict the notion of efficient markets. Phenomena such as the stock market and dot-com bubbles suggest that markets can be driven by factors other than fundamental value. These events showed how asset prices can deviate significantly from their intrinsic value, sometimes for extended periods.\n\nOne explanation for these deviations is that markets are populated by irrational agents, or \"homo psychologicus.\" These agents' decisions and valuations are influenced more by bias and emotions than by rational calculation. This can lead to phenomena such as herd behavior, where investors follow the crowd rather than making independent assessments of value.\n","6a99c051-bbdd-443f-8450-3b61624288a3",[1323],{"id":1324,"data":1325,"type":54,"version":25,"maxContentLevel":37},"d9fb15a3-c79c-4c53-847d-04048546fc3a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1326,"multiChoiceCorrect":1328,"multiChoiceIncorrect":1330},[1327],"What does traditional economic theory assert about markets?",[1329],"Markets are efficient",[1331,1332,1333],"Markets are irrational","Markets are unpredictable","Markets are unstable",{"id":1335,"data":1336,"type":25,"maxContentLevel":37,"version":25,"reviews":1340},"39672998-7c2f-4ffe-ab6e-54c3bcf8c734",{"type":25,"title":1337,"contentRole":28,"markdownContent":1338,"audioMediaId":1339},"Introducing Behavioral Finance","The concept of irrational behavior influencing financial decision making is not new. As early as 1936, economist John Maynard Keynes used the term ‘animal spirits,’ referring to how human emotion can drive economic activity. This idea challenges the traditional economic view of humans as purely rational actors and introduces the possibility of systematic biases in decision making.\n\n ![Graph](image://e7032846-b056-413e-b9fd-3c973fdc4b4b \"John Maynard Keynes. Image: via flickr\")\n\n\nBehavioral finance builds on this idea, using insights from psychology and behavioral economics to understand irrationality in financial markets. The field seeks to explain why market participants often behave in ways that are inconsistent with the predictions of traditional economic theory.\n\nBehavioral finance draws on various concepts from psychology to explain investors’ irrational behavior. Mental accounting suggests that people treat money differently depending on its source or intended use. Herd behavior explains why investors follow the crowd instead of making independent judgments. And self-attribution illustrates how investors attribute their success to skill but blame bad luck for any failures.\n\n","846b654e-54b5-4f66-a152-68bd1ff7dcfc",[1341],{"id":1342,"data":1343,"type":54,"version":25,"maxContentLevel":37},"5ea235b4-8627-4a6b-9e58-db206906e4dc",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1344,"activeRecallAnswers":1349},[1345,1346,1347,1348],"What term did economist John Maynard Keynes use to refer to the influence of human emotion on economic activity?","What phrase did John Maynard Keynes coin to describe the impact of human emotion on economic activities?","In the context of economic activity, what term did John Maynard Keynes use to denote the role of human emotion?","What was the term used by John Maynard Keynes to signify the effect of human emotions on economic behavior?",[1350],"Animal spirits",{"id":1352,"data":1353,"type":25,"maxContentLevel":37,"version":25,"reviews":1357},"f74d644e-23b1-4de8-9485-0f0b320080d9",{"type":25,"title":1354,"contentRole":28,"markdownContent":1355,"audioMediaId":1356},"The 2008 Global Financial Crisis","The 2008 financial crisis provides a stark example of how behavioral biases can lead to market instability. Investors, driven by overconfidence and a herd mentality, bid up asset prices in the housing market. This created a bubble that eventually burst, leading to a severe economic downturn. This event highlighted the limitations of the efficient market hypothesis.\n\nA key factor contributing to the crisis was the widespread belief among investors that past performance was a reliable indicator of future returns. Homeowners assumed that home values would increase indefinitely, as they did in the past. When this assumption proved false, many homeowners found themselves unable to meet mortgage obligations, triggering a wave of defaults that set off the financial crisis.\n\nThe complexity of financial products being traded also added to the crisis. Many investors did not fully understand these products, yet were willing to buy them. This lack of understanding, combined with overconfidence and herd behavior, created a situation ripe for a market crash.","9fa2127e-f261-4187-88f7-c3936da36664",[1358],{"id":1359,"data":1360,"type":54,"version":25,"maxContentLevel":37},"33298a92-fe2f-443a-9b82-a1bba4037191",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1361,"multiChoiceCorrect":1363,"multiChoiceIncorrect":1365},[1362],"Which behavioral bias that can lead to market instability was highlighted by the 2008 financial crisis?",[1364],"Herd mentality",[1366,813,1367],"Sunk cost fallacy","Framing effect",{"id":1369,"data":1370,"type":25,"maxContentLevel":37,"version":28,"reviews":1374},"1b4fd76c-17a6-4709-a653-5814c556293f",{"type":25,"title":1371,"contentRole":28,"markdownContent":1372,"audioMediaId":1373},"Lessons from the 2008 Global Financial Crisis","The 2008 financial crisis underscored the importance of regulation in financial markets. The crisis demonstrated that markets are not always rational or self-correcting, and that unchecked risk-taking can lead to severe economic consequences. This has led to calls for stronger regulation to prevent excessive risk-taking and to ensure that financial institutions have sufficient capital to withstand market downturns.\n\n![Graph](image://e29cfedd-2659-4564-82ee-ff3f644f2d92 \"Comedic representation of the 2008 stock market, upside down and backwards. Image: Cartoosh, CC BY-SA 3.0 \u003Chttp://creativecommons.org/licenses/by-sa/3.0/>, via Wikimedia Commons\")\n\nThe crisis also highlighted the role of moral hazard in financial markets. Many of the risky assets that contributed to the crisis were traded by commercial banks on behalf of individual investors. This separation of ownership and control can lead to excessive risk-taking, as those making the decisions are not the ones who bear the full consequences of their actions.\n\nThe crisis also served as a reminder of the dangers of herd mentality. Many investors followed the crowd in buying risky assets, contributing to the inflation and subsequent bursting of the housing bubble. This highlights the importance of independent thinking and careful analysis in investment decision making.","3165f9a4-7c7d-425b-95f4-42fdeb189982",[1375],{"id":1376,"data":1377,"type":54,"version":25,"maxContentLevel":37},"646e1cf2-c800-4e12-81b2-51c1702f2620",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1378,"activeRecallAnswers":1383},[1379,1380,1381,1382],"What term refers to the phenomenon where the decision-makers do not bear the full consequences of their actions, leading to excessive risk-taking in financial markets?","What is the term for the situation in financial markets where excessive risk-taking occurs because those making the decisions don't fully suffer the consequences of their actions?","In financial markets, what is the term that describes the scenario where decision-makers are not the ones who fully endure the repercussions of their risky actions, leading to excessive risk-taking?","What is the term that refers to the situation where the individuals making decisions in financial markets do not fully bear the outcomes of their risky actions, resulting in excessive risk-taking?",[1384],"Moral hazard",{"id":1386,"data":1387,"type":28,"version":28,"maxContentLevel":37,"pages":1389},"e8986b57-00b2-4f8f-bb49-4676c6e3793a",{"type":28,"title":1388},"Behavioral Economics in Social Issues",[1390,1408,1426,1444,1462],{"id":1391,"data":1392,"type":25,"maxContentLevel":37,"version":28,"reviews":1396},"36e9faab-5929-412c-8644-33a65b0afb0b",{"type":25,"title":1393,"contentRole":28,"markdownContent":1394,"audioMediaId":1395},"Examining the Gender Pay Gap","Behavioral economics provides a useful lens for understanding the gender pay gap. Studies using the ultimatum game have found that women are often offered less than men and are more likely to accept unfair offers. This illustrates how gender biases can influence economic decisions, contributing to the inequality in pay.\n\n![Graph](image://8a7799a7-86e5-4b52-baf8-e35aeb7eee20 \"Female filmmakers protest the gender pay gap in Cannes, France. Image: Georges Biard, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nWidespread awareness of the gender pay disparity can also have unintended consequences. If women come to accept lower pay as a social norm, they may be less likely to negotiate for higher wages. This is consistent with the way prospect theory suggests that our decisions are affected by our expectations and reference points.\n\nEfforts to narrow the gender pay gap draw from behavioral economics concepts. By placing emphasis on competencies and skills regardless of gender, advocates reframe the issue by steering the conversation away from gender. As well, the clamor for more transparency in hiring and remuneration policies seeks to minimize the uncertainty around pay negotiations. With better access to information, job seekers might be able to make better employment decisions.","f07b2aa4-361f-492c-ad35-21477de89b10",[1397],{"id":1398,"data":1399,"type":54,"version":25,"maxContentLevel":37},"275e770e-b98c-41bc-8c75-90dad00eafba",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1400,"multiChoiceCorrect":1402,"multiChoiceIncorrect":1404},[1401],"According to behavioral economics, what can help narrow the gender pay gap?",[1403],"Emphasis on competencies and skills",[1405,1406,1407],"Inequality aversion","Stricter enforcement of policies","Income redistribution",{"id":1409,"data":1410,"type":25,"maxContentLevel":37,"version":28,"reviews":1414},"938199a8-4001-4d58-8d18-d30884fe81e5",{"type":25,"title":1411,"contentRole":28,"markdownContent":1412,"audioMediaId":1413},"Behavioral Economics and Our Health","Behavioral economics can also shed light on health-related decisions. Many individuals make choices that prioritize immediate gratification over long-term health benefits, a phenomenon known as present bias. For example, indulging in chocolate cake now brings me immediate pleasure. At this moment, that pleasure outweighs the future health benefits of limiting sugar consumption.\n\n![Graph](image://28132778-f9f5-4950-9b57-1767cade313b \"A woman eating a chocolate cake. Image: via wallpaper flare\")\n\nFraming and choice architecture can also be used to improve health-related decision making. For example, presenting healthy habits as status quo might elicit more of the same behavior. If everyone else is getting vaccinated, one might think, “Then perhaps I should too.”\n\nYet there are skeptics who continue to dig their heels and refuse the COVID-19 vaccine despite the best efforts of health authorities to promote vaccination. We can see in this instance how, in such circumstances, soft measures do not have the same success rate as hard measures, but also that hard measures like mandatory vaccinations are politically challenging to implement.","36968e4c-12a2-467d-aab3-d297f6b5e806",[1415],{"id":1416,"data":1417,"type":54,"version":25,"maxContentLevel":37},"6817ec4f-7a7c-44ba-aa4c-66d6a157663d",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1418,"multiChoiceCorrect":1420,"multiChoiceIncorrect":1422},[1419],"Which term refers to prioritizing immediate gratification over long-term benefits?",[1421],"Present bias",[1423,1424,1425],"Future bias","Gratification bias","Immediate bias",{"id":1427,"data":1428,"type":25,"maxContentLevel":37,"version":28,"reviews":1432},"42ee28e0-644b-4ae9-a16b-20577841b1ee",{"type":25,"title":1429,"contentRole":28,"markdownContent":1430,"audioMediaId":1431},"Using Behavioral Economics to Advance Health Care","Behavioral economics can also inform health care policy. For example, status quo bias explains how we might choose inaction when we are overwhelmed by choice. Imagine a person faced with the arduous task of choosing health insurance. With a multitude of options and no idea where to start, one might give up before they’ve even started. By setting default options, governments can sidestep status quo bias on this front.\n\n![Graph](image://cc6a2cc9-f705-4487-85d4-b139ee65299b \"A doctor examining a child. Image: via Freepik.\")\n\nThe phenomenon of decision fatigue, or the deterioration of decision-making ability after making many decisions, is also being discussed more in the medical field. Behavioral economics provides an array of techniques for doctors and health workers to manage decision fatigue, such as simplifying choices, using workflows like fast and frugal trees, and taking regular breaks.\n\nA behavioral economics lens has also been used to examine low participation rates in public health care insurance in the United States, particularly in programs like the Children's Health Insurance Program (CHIP) and Medicaid. By examining and addressing the psychological barriers towards participation, policymakers can encourage participation in these programs more effectively.","3751420c-c77a-4c3a-9ef1-4c5f1d557e4a",[1433],{"id":1434,"data":1435,"type":54,"version":25,"maxContentLevel":37},"0db28da9-2e83-41b7-a015-4e7545d0d50e",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1436,"multiChoiceCorrect":1438,"multiChoiceIncorrect":1440},[1437],"What is a technique to manage decision fatigue?",[1439],"Simplifying choices",[1441,1442,1443],"Increasing options","Breaking down decision making into multiple steps","Avoiding breaks",{"id":1445,"data":1446,"type":25,"maxContentLevel":37,"version":28,"reviews":1450},"f239f2b5-8ed0-4695-bf6c-acb415319225",{"type":25,"title":1447,"contentRole":28,"markdownContent":1448,"audioMediaId":1449},"Encouraging Positive Lifestyle Changes with Behavioral Economics","One of the commonly cited applications of Thaler and Sunstein’s nudge theory relates to encouraging healthier food choices. ‘School meal nudges’ rely on subtly changing the way food options are presented – say, displaying healthier food more prominently – in order to steer individuals towards these choices. Numerous studies have been published on this topic.\n\n![Graph](image://dda3aa48-187e-4ac7-9b59-b5562810bba1 \"Cigarettes with ashtray depicting tobacco consumption. Image: via Freepik\")\n\nTobacco consumption is another behavior that the UK's Behavioural Insights Team has sought to combat using behavioral economics. The BIT used techniques like social contracts, which use social pressure to encourage behavior change, and the promotion of electronic cigarettes as a less harmful alternative to traditional cigarettes.\n\nBehavioral economics has also been used in interventions aimed at promoting nutrition and reducing obesity among the youth. These programs use techniques like offering incentives and changing defaults. However, the effectiveness of such programs has yet to be established.","f24cb209-e8f3-436f-bc6b-eeafb5499955",[1451],{"id":1452,"data":1453,"type":54,"version":25,"maxContentLevel":37},"6b67fbb2-6a4c-4432-b8dc-f45f3d151a66",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1454,"multiChoiceCorrect":1456,"multiChoiceIncorrect":1458},[1455],"What technique did the UK's Behavioural Insights Team use to combat tobacco consumption?",[1457],"Social contracts",[1459,1460,1461],"Increasing taxes on tobacco","Banning tobacco advertising","Promoting nicotine patches",{"id":1463,"data":1464,"type":25,"maxContentLevel":37,"version":28,"reviews":1468},"76387aac-5ab8-4d13-a327-1cf9e4d807d4",{"type":25,"title":1465,"contentRole":28,"markdownContent":1466,"audioMediaId":1467},"The Peltzman Effect: When Safety Measures Promote Risky Behavior","The Peltzman effect, named after economist Sam Peltzman, refers to the idea that safety measures can sometimes lead to more risk-taking. Peltzman proposed this idea in the context of automobile safety regulations in the 1960s, arguing that drivers might take more risks if they felt safer due to regulations that were about to be implemented at the time.\n\n![Graph](image://a54efb7d-675b-40d2-bc13-53c76fbad64f \"A man wearing a face mask. Image: via Freepik\")\n\nPeltzman's research found that automobile safety regulations did not lead to a decrease in related deaths. This suggested that drivers were indeed taking more risks, presumably because they felt safer. This counterintuitive finding highlights the importance of considering behavioral responses when designing safety measures.\n\nThe Peltzman effect has also been observed in other contexts, such as the COVID-19 pandemic. As mask regulations were enforced, some people may have relaxed other safety measures, such as handwashing or social distancing. This highlights the need for comprehensive safety measures that take into account potential behavioral responses.","4dab3e96-f086-4096-b1f7-59dd5a574e8c",[1469],{"id":1470,"data":1471,"type":54,"version":25,"maxContentLevel":37},"a3659318-0ccb-4cad-a58a-931d6d0cc592",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1472,"multiChoiceCorrect":1474,"multiChoiceIncorrect":1476},[1473],"What does the Peltzman effect refer to?",[1475],"Safety measures leading to more risk-taking",[1477,1478,1479],"Safety measures reducing risks","Safety measures being ignored","Safety measures improving behavior",{"id":1481,"data":1482,"type":29,"maxContentLevel":37,"version":28,"orbs":1485},"ec750815-ed72-4944-9873-030cf34a7161",{"type":29,"title":1483,"tagline":1484},"Takeaways from Behavioral Economics","How to use behavioral economics to make better decisions.",[1486,1562],{"id":1487,"data":1488,"type":28,"version":28,"maxContentLevel":37,"pages":1490},"b1a61913-ea23-4cb9-9a42-760564216df8",{"type":28,"title":1489},"Understanding Human Behavior",[1491,1509,1527,1544],{"id":1492,"data":1493,"type":25,"maxContentLevel":37,"version":28,"reviews":1497},"ae1ecc98-0bd5-454c-b607-f0119bce6143",{"type":25,"title":1494,"contentRole":28,"markdownContent":1495,"audioMediaId":1496},"Confidence and the Dunning-Kruger Effect","Confidence is widely regarded as a positive trait, but overconfidence has its pitfalls, behavioral economics warns. Overconfidence can lead us to overestimate our abilities or the accuracy of the information we use to make decisions. This overestimation can lead to poor decision making and potentially negative outcomes.\n\nTaken a step further, overconfidence may transform into the Dunning-Kruger Effect. This is a psychological phenomenon whereby a person's lack of knowledge and skills in a certain area leads them to overestimate their own competence. This overestimation can result in misguided decisions and actions – a reminder that a little knowledge is a dangerous thing.\n\n![Graph](image://519477a7-1a12-4142-93e3-27c776160c48 \"Graphical representation of the Dunning Kruger Effect on student self perceived performance and actual performance on an exam. Image: https://commons.wikimedia.org/w/index.php?title=User:Diego_Moya, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nTo counteract overconfidence and the Dunning-Kruger Effect, behavioral economics suggests several strategies. These include being open to and actively seeking advice from others, seeking information that contradicts our existing beliefs, and reflecting on and learning from past choices.","a6e70d68-9cf0-4bab-9707-f7e41fcc4a3d",[1498],{"id":1499,"data":1500,"type":54,"version":25,"maxContentLevel":37},"cf1b7ec8-9c5e-48da-b65a-95e7763831d2",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1501,"multiChoiceCorrect":1503,"multiChoiceIncorrect":1505},[1502],"What is the Dunning-Kruger Effect?",[1504],"Overestimation of competence due to lack of knowledge",[1506,1507,1508],"Underestimation of competence","Accurate estimation of abilities","Underestimation of positive outcomes",{"id":1510,"data":1511,"type":25,"maxContentLevel":37,"version":28,"reviews":1515},"9cf72fa7-af13-44c8-9036-bdd417cad468",{"type":25,"title":1512,"contentRole":28,"markdownContent":1513,"audioMediaId":1514},"Understanding Procrastination","Procrastination, something most of us struggle with, is viewed by behavioral economics as a special case of present bias, which is our tendency to prioritize immediate rewards over future benefits. This bias can lead us to delay tasks that do not provide immediate gratification, even if completing these tasks would be beneficial to us in the long run.\n\n![Graph](image://43a941b8-5d84-4e22-8619-9541823af4f8 \"Graphical representation of procrastination. Image: ARORA RITIKA 31, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nTo combat procrastination, some studies suggest the use of precommitment strategies paired with small rewards. These strategies involve making a commitment to complete a task in advance and rewarding oneself upon completion. This approach can help overcome the present bias by providing immediate rewards for task completion.\n\nProcrastination can also be understood as a reaction to information overload. When faced with too many choices, individuals may choose inaction instead. This behavior is related to status quo bias, which refers to a preference for maintaining existing conditions, even when change may be beneficial.","0ddc8459-167e-44b6-a854-f64b61ae96f3",[1516],{"id":1517,"data":1518,"type":54,"version":25,"maxContentLevel":37},"15a21b87-0066-4a02-9c69-ac76863a4773",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1519,"multiChoiceCorrect":1521,"multiChoiceIncorrect":1523},[1520],"What is procrastination viewed as in behavioral economics?",[1522],"A special case of present bias",[1524,1525,1526],"Result of laziness","Lack of motivation","Fear of failure",{"id":1528,"data":1529,"type":25,"maxContentLevel":37,"version":28,"reviews":1533},"d679d56a-8b3f-44e1-b089-42d2fde857a9",{"type":25,"title":1530,"contentRole":28,"markdownContent":1531,"audioMediaId":1532},"Improving Personal Finance","In the realm of personal finance, the concept of defaults can be a powerful tool for managing money. For instance, automatically depositing a portion of one's salary into a savings account can help curb impulse spending. This is because the money is out of immediate reach, making it less likely to be spent frivolously.\n\n![Graph](image://50428016-ba0e-4e32-9c4e-b8319f7015a2 \"A man making payments via credit card. Image: wayhomestudio via Freepik\")\n\nSome people avoid the temptations of delayed payment by leaving their credit cards at home or not maintaining one at all. This practice might be too extreme or impractical in certain situations, but it does make good use of the concept of ‘the pain of paying.’ Regardless, being aware of how mental accounting can work against us might help us avoid overspending on impulse purchases when using credit cards, installment plans, or buy now, pay later schemes.\n\nAnother way to increase the 'pain of paying' is to immediately record every purchase one makes. This practice can make individuals more mindful of their spending habits and help them make more informed financial decisions.","2ff6e598-9302-4ebd-9d5b-274dfe672bf0",[1534],{"id":1535,"data":1536,"type":54,"version":25,"maxContentLevel":37},"6bb860f6-8779-43d1-8632-764c2a57d3ee",{"type":54,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1537,"activeRecallAnswers":1542},[1538,1539,1540,1541],"What is the concept in personal finance that refers to the discomfort one feels when parting with their money?","What is the term used in personal finance to describe the unease experienced when spending money?","In personal finance, what is the term for the discomfort experienced when one has to part with their money?","What is the financial concept that refers to the distress one feels when they have to spend their money?",[1543],"The pain of paying",{"id":1545,"data":1546,"type":25,"maxContentLevel":37,"version":28,"reviews":1550},"74afcce4-ca42-44c8-9193-64c7d8b4f27e",{"type":25,"title":1547,"contentRole":28,"markdownContent":1548,"audioMediaId":1549},"Better Fitness Habits","A study by economist Anya Samek suggests that planning grocery shopping in advance can help individuals make healthier choices. This strategy can aid in self-control, reducing the likelihood of impulse purchases of unhealthy foods.\n\n![Graph](image://8d6da774-a658-440e-9c5f-903487a93220 \"A woman working out at the gym. Image: fxquadro via Freepik\")\n\nIn terms of making good use of one’s gym membership, the concept of temptation bundling can be useful. By pairing a desirable activity, such as listening to a favorite podcast, with gym attendance, the ‘less desirable’ activity becomes more appealing. In turn, this increases the likelihood of adhering to activities we regard as chores.\n\nWearable devices and fitness trackers use the concept of nudging to encourage users to lead less sedentary lifestyles. These devices provide reminders and incentives to move more, helping users make healthier choices.","f06cb9a5-7f89-4a60-9618-a79a8ef5eb6e",[1551],{"id":1552,"data":1553,"type":54,"version":25,"maxContentLevel":37},"a7463ad1-afd3-45bb-a0b9-cd3a61150305",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1554,"multiChoiceCorrect":1556,"multiChoiceIncorrect":1558},[1555],"What concept do wearable devices and fitness trackers apply to encourage less sedentary lifestyles?",[1557],"Concept of nudging",[1559,1560,1561],"Concept of bundling","Concept of planning","Concept of scheduling",{"id":1563,"data":1564,"type":28,"version":28,"maxContentLevel":37,"pages":1566},"1c0e78c5-8622-4bdd-8517-caacaef79200",{"type":28,"title":1565},"Improving Daily Habits",[1567,1585,1601,1618],{"id":1568,"data":1569,"type":25,"maxContentLevel":37,"version":25,"reviews":1573},"10a513cf-977b-4d60-ab75-152fe2a40b51",{"type":25,"title":1570,"contentRole":28,"markdownContent":1571,"audioMediaId":1572},"Better Shopping Habits","Consumer marketing often uses concepts from behavioral economics to encourage consumers to spend more. By being aware of these techniques, consumers can make more informed decisions when shopping.\n\nFor example, an extremely generous returns policy can tempt a shopper into purchasing a product they might be on the fence about. After all, they can easily return the item if it doesn’t meet expectations. However, the endowment effect suggests that even when we aren’t completely happy with a purchase, we might struggle to take it back to the store. By virtue of owning the item, we unconsciously place more value on it. In the end, we might not end up returning our purchase, no matter how disappointing it was.\n\n ![Graph](image://02c7dd21-401c-447d-9210-3f1c385e8d55 \"A woman grocery shopping. Image: prostooleh via Freepik\")\n\n\nBeing aware of how our cognitive biases lead us to make suboptimal purchases can, to some extent, help us cultivate better shopping habits. By being intentional with our shopping, we are better able to override our impulses and biases, and apply better, more informed decision making.\n\n","b01abc65-d4ce-444a-b20d-4a6034e625a6",[1574],{"id":1575,"data":1576,"type":54,"version":25,"maxContentLevel":37},"7f779343-3d55-400f-b3c2-86ab481d56d6",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1577,"multiChoiceCorrect":1579,"multiChoiceIncorrect":1581},[1578],"What is the endowment effect?",[1580],"Placing more value on owned items",[1582,1583,1584],"Spending more on luxury items","Preferring items on sale","Ignoring product flaws",{"id":1586,"data":1587,"type":25,"maxContentLevel":37,"version":28,"reviews":1591},"aac66727-f2fe-40ee-a267-81c7a2ed0150",{"type":25,"title":1588,"contentRole":28,"markdownContent":1589,"audioMediaId":1590},"Reading Between the Lines","Brushing up on behavioral psychology serves as a good reminder that we shouldn’t believe everything we read or hear. Easier said than done, as our cognitive biases can influence our interpretation of information, and our confirmation bias in particular can short circuit our critical thinking.\n\n![Graph](image://899ea6b5-c9e4-4124-91f3-6ac6670b7ee8 \"Laptop with fake news on screen. Image: mikemacmarketing, CC BY 2.0 \u003Chttps://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons\")\n\nBrands and businesses often use concepts like the framing effect, anchoring effect, and loss aversion in their communications. Even if we know this to be true, we might still be taken in by what they say. Even expert marketers can fall prey to marketing material that’s crafted well enough.\n\nCritical thinking should also be applied when consuming media or engaging in conversations that could influence our opinions on important matters. Fake news, for instance, often leverages our cognitive biases to shape our beliefs and advance certain agendas.","9485e88f-47c3-4a00-80b8-3e3cedcaebe4",[1592],{"id":1593,"data":1594,"type":54,"version":25,"maxContentLevel":37},"aff448be-987c-40e3-ae2b-43db5dd4fb1b",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1595,"multiChoiceCorrect":1597,"multiChoiceIncorrect":1599},[1596],"What should be applied when consuming media or engaging in conversations?",[1598],"Critical thinking",[813,1367,1600],"Intuitive thinking",{"id":1602,"data":1603,"type":25,"maxContentLevel":37,"version":25,"reviews":1607},"68b9e663-73f1-42e0-af32-65fed3eaf41e",{"type":25,"title":1604,"contentRole":28,"markdownContent":1605,"audioMediaId":1606},"Finding Happiness","Can money buy happiness? While it's true that financial stability can alleviate stress and provide comfort, research suggests that beyond a certain threshold, additional wealth does not significantly increase happiness. This finding seems to align with Tversky and Kahneman’s prospect theory in that our goalposts or reference points matter, and they may shift as we move through different stages of life.\n\nAnother lesson behavioral economics can teach us about happiness is the value of changing our perspective or framing. By focusing on the positive aspects of our lives and cultivating a mindset of gratitude, we can enhance our overall satisfaction and contentment.\n\n ![Graph](image://149c5950-9aca-4892-ba64-881c3cd279e9 \"A woman looking happy after shopping. Image:  katemangostar via Freepik\")\n\n\nThat said, if we find ourselves truly unhappy with certain aspects of our lives, it's important to identify the root cause and take steps to address it. It's crucial to avoid falling into the trap of status quo bias, which can prevent us from making changes that could improve our happiness.\n","947660c2-af5c-40ef-82d5-cbe1f8f6b2d6",[1608],{"id":1609,"data":1610,"type":54,"version":25,"maxContentLevel":37},"b966ee36-b09d-4782-9db2-ba7ce2d69e82",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1611,"multiChoiceCorrect":1613,"multiChoiceIncorrect":1615},[1612],"What cognitive bias can prevent us from making changes that could improve our happiness?",[1614],"Status quo bias",[1266,1616,1617],"Availability heuristic","Time discounting",{"id":1619,"data":1620,"type":25,"maxContentLevel":37,"version":25,"reviews":1624},"95c1da1d-f15f-4d4d-b64c-3475cbb899fb",{"type":25,"title":1621,"contentRole":28,"markdownContent":1622,"audioMediaId":1623},"Not Everyone Is Out to Get You","While it's important to be aware of how external factors can influence our beliefs and decisions, this awareness should not lead to cynicism. Not all influences are negative or manipulative, and many can provide valuable insights and opportunities for growth.\n\nUltimately, we are all complex beings guided by a mix of rational and irrational thoughts and behaviors. Our histories, emotions, and irrationalities shape our decisions and actions in unique ways.\n\nBehavioral economics serves as a reminder of our shared human nature. It provides valuable insights into our decision-making processes, helping us understand why we make the choices we do and how we can make better decisions in the future.","2e3abfbe-e6cf-42c0-8642-c4ed109e3d8b",[1625],{"id":1626,"data":1627,"type":54,"version":25,"maxContentLevel":37},"2209e0c0-9a94-4bce-922c-274df8842967",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1628,"multiChoiceCorrect":1630,"multiChoiceIncorrect":1632},[1629],"What does behavioral economics provide insights into?",[1631],"Our decision-making processes",[1633,1634,1635],"Our physical health","Our genetic makeup","Our economic standing",{"id":1637,"data":1638,"type":29,"maxContentLevel":37,"version":37,"orbs":1641},"04cc6ed9-5830-4340-ace4-eaf345a2348e",{"type":29,"title":1639,"tagline":1640},"Where to Go From Here","Challenges, criticisms, and opportunities for Behavioral Economics",[1642,1687,1741],{"id":1643,"data":1644,"type":28,"version":28,"maxContentLevel":37,"pages":1646},"923cb1e5-8a0d-4d34-9eb7-350efbc5c3e6",{"type":28,"title":1645},"The Current State of Behavioral Economics",[1647,1665,1671],{"id":1648,"data":1649,"type":25,"maxContentLevel":37,"version":28,"reviews":1653},"52bed8dc-6da5-46eb-a42e-71e24e5c47e3",{"type":25,"title":1650,"contentRole":28,"markdownContent":1651,"audioMediaId":1652},"Behavioral Economics at Present","Behavioral economics, despite being a relatively new field, has garnered significant support and respect from traditional economics and the wider world. This is in part due to the Nobel Prize being awarded to several of its prominent thinkers, including Richard Thaler and Daniel Kahneman.\n\nCurrently, behavioral economics is enjoying a surge in popularity. It has become a buzzword in many circles, indicating its growing influence and the increasing interest in its concepts and applications. This has led to a greater awareness and understanding of the field, contributing to its current prominence.\n\n![Graph](image://c1389d17-f7a6-42d2-bb21-ad08f78a9f58 \"Richard Thaler. Image: Bengt Nyman from Vaxholm, Sweden via Wikimedia Commons\")\n\nThe rise in the popularity of behavioral economics is also reflected in the increased funding for research in the field since 2010. This has led to a surge in influential papers under its banner, which have seen an increased citation frequency in economic journals. This trend underscores the growing recognition of the field's importance and its potential to contribute to public discourse.","68dba8da-8bac-4be2-bf8c-fe491952b30f",[1654],{"id":1655,"data":1656,"type":54,"version":25,"maxContentLevel":37},"0e26787e-decb-4a4f-8155-8e26b75ff056",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1657,"multiChoiceCorrect":1659,"multiChoiceIncorrect":1661},[1658],"What indicates the growing influence of behavioral economics?",[1660],"Increased citation frequency",[1662,1663,1664],"Decreased funding","Increased criticism","Increased coverage on social media",{"id":1666,"data":1667,"type":25,"maxContentLevel":37,"version":25},"fc3e2694-2cb6-40d9-813b-028d4f1353e7",{"type":25,"title":1668,"contentRole":28,"markdownContent":1669,"audioMediaId":1670},"Behavioral and Traditional: A False Dichotomy","When behavioral economics first started to gain traction, it was often framed as a disruptor and challenger to mainstream economics. This perspective, however, has evolved over time as the field has matured and its relationship with traditional economics has become more nuanced.\n\nToday, proponents of behavioral economics acknowledge that it is not set to replace traditional economics in the near future. Instead, it serves to complement and enrich the discussions within the domain of economics. This shift in perspective has allowed for a more balanced and productive dialogue between the two fields.\n\nBy acknowledging the irrationality of human decision making, behavioral economics can provide more practical and realistic insights. On the other hand, the field has yet to produce elegant, simple models the way traditional economics has. This highlights the unique strengths and challenges of each field, and the potential for them to learn from each other.","de9cde3f-85bb-4879-988e-c523aebb9a07",{"id":1672,"data":1673,"type":25,"maxContentLevel":37,"version":28,"reviews":1677},"1bae2ab2-46be-45f8-9b24-64becaa7f1eb",{"type":25,"title":1674,"contentRole":28,"markdownContent":1675,"audioMediaId":1676},"Behavioral Economics in Other Domains","![Graph](image://7e949f4a-49a1-4e8e-aff9-2d4f1afded4e \"A man eating healthy food. Image: via Freepik\")\n\nBehavioral economics has found its way into the policymaking toolkit, with nudges being a particularly popular tool. However, the use of these tools is not without controversy, highlighting the need for careful consideration and ethical guidelines in their application.\n\nThe field of marketing, in particular, has been quick to adopt the principles of behavioral economics, using them to capitalize on consumers’ irrational behavior to boost sales. This has led to innovative marketing strategies that leverage insights from behavioral economics to influence consumer behavior.\n\nThe principles of behavioral economics have also been applied to the public health domain. Initiatives have been launched to improve medication adherence, encourage healthier lifestyle habits, and improve medical decision making on the part of health practitioners and patients alike. These applications demonstrate the potential of behavioral economics to contribute to a wide range of fields.","5e13b572-4ca0-470a-bca3-2f96cbf765c4",[1678],{"id":1679,"data":1680,"type":54,"version":25,"maxContentLevel":37},"ededd202-f188-4bf2-ac68-17b279655538",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1681,"multiChoiceCorrect":1683,"multiChoiceIncorrect":1684},[1682],"A popular tool in the policymaking toolkit from behavioral economics is:",[230],[1685,234,1686],"Sludges","Biases",{"id":1688,"data":1689,"type":28,"version":25,"maxContentLevel":37,"pages":1691},"b4999956-eb67-49be-a3ec-61ddafeceaf1",{"type":28,"title":1690},"Behavioral Economics and Technology",[1692,1708,1723],{"id":1693,"data":1694,"type":25,"maxContentLevel":37,"version":25,"reviews":1697},"9a80aca0-b6ea-4ffc-8696-194988ec9950",{"type":25,"title":1690,"contentRole":28,"markdownContent":1695,"audioMediaId":1696},"The rise of technology has opened up new opportunities for the application of behavioral economics. Tech startups have begun offering users the chance to leverage concepts from behavioral economics to form better habits and modify their behavior, demonstrating the potential of these principles in the digital age.\n\n ![Graph](image://0617cffb-6c6a-478e-8e99-5ee69859b5cc \"A man using Facebook on their phone. Image: jannoon028 via Freepik\")\n\n\nApps like Uber and Facebook have also incorporated concepts from behavioral economics to subtly influence user behavior. This can occur with or without the user's awareness and consent, highlighting the ethical considerations involved in the application of these principles.\n\nUser interface and user experience design, which focus on delivering smooth, accessible products to end users, also borrow heavily from behavioral economics. By having a better understanding of how users make decisions, website and app designers can create better, more user-friendly products.\n","a04e1ca7-6c94-4ebe-8fcd-c470bce1d291",[1698],{"id":1699,"data":1700,"type":54,"version":25,"maxContentLevel":37},"85e8b6bb-63bc-401e-8baf-30f9a85b27af",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1701,"multiChoiceCorrect":1703,"multiChoiceIncorrect":1704},[1702],"What do user interface and user experience design borrow heavily from to understand how users make decisions?",[61],[1705,1706,1707],"Traditional economics","Graphic design","Marketing",{"id":1709,"data":1710,"type":25,"maxContentLevel":37,"version":25,"reviews":1714},"2d819ea0-37db-4567-8ee6-333483fb1aed",{"type":25,"title":1711,"contentRole":28,"markdownContent":1712,"audioMediaId":1713},"Leveraging Irrationality","The insights from behavioral economics can be used to help better ourselves and society as a whole. However, these same insights can also be used for malintent or for selfish purposes, highlighting the need for ethical guidelines in the application of these principles.\n\nThe combination of 'big data' collected by tech companies and insights from cognitive psychology and behavioral economics can be used to manipulate consumer behavior. This can occur without necessarily benefiting the consumers, raising ethical concerns about the use of these techniques.\n\nThe term \"sludge\" has been coined to refer to a selfish nudge, which is when companies nudge individuals towards behaviors that only benefit the company themselves. Uber is an example of a company that has been called out for such practices, highlighting the potential for misuse of the principles of behavioral economics.","c4b2e177-6e75-46ef-a600-0736202f0275",[1715],{"id":1716,"data":1717,"type":54,"version":25,"maxContentLevel":37},"1e7b4840-9b67-41a5-a551-690dd4834840",{"type":54,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1718,"clozeWords":1721},[1719,1720],"The term \"sludge\" refers to a selfish nudge, a manipulative practice in behavioral economics.","In behavioral economics, a selfish nudge is referred to as \"sludge\"",[1722],"\"sludge\"",{"id":1724,"data":1725,"type":25,"maxContentLevel":37,"version":25,"reviews":1729},"231f23fe-a200-4bfd-9589-4e66d830175f",{"type":25,"title":1726,"contentRole":28,"markdownContent":1727,"audioMediaId":1728},"Publication Bias","With the current excitement around behavioral economics as a field, promising new studies may easily be sensationalized and presented as offering revolutionary solutions to the world's problems. However, it is important to keep publication bias in mind – prominent journals usually have an overemphasis on studies with strong conclusions, while those with less robust results are often swept aside.\n\nAn awareness of publication bias can inspire curiosity in the studies we don’t see or read about in prominent journals. After all, a well-rounded approach to science involves examining not just our successes but also our failures.\n\n ![Graph](image://0a170fd2-5081-4e87-8255-254f9faa6fa3 \"A library filled with journals and publications. Image: frimufilms via Freepik\")\n\n\nIf more attention was given to the experiments that did not make it to publication, a more balanced view of behavioral economics might be achieved. This could help to temper enthusiasm for the field and provide a more realistic understanding of its potential and limitations.\n","9cfcd386-59d5-4290-ae6a-5023c8ee4544",[1730],{"id":1731,"data":1732,"type":54,"version":25,"maxContentLevel":37},"4f4c6656-d754-4c99-a808-e6e9b2f24664",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1733,"multiChoiceCorrect":1735,"multiChoiceIncorrect":1737},[1734],"Prominent journals usually have an overemphasis on studies with:",[1736],"Strong conclusions",[1738,1739,1740],"Weak conclusions","Neutral conclusions","No conclusions",{"id":1742,"data":1743,"type":28,"version":37,"maxContentLevel":37,"pages":1745},"a24e499b-dafa-4f47-9eea-b8b38a2bb5f0",{"type":28,"title":1744},"Ethical and Practical Challenges",[1746,1764,1782],{"id":1747,"data":1748,"type":25,"maxContentLevel":37,"version":28,"reviews":1752},"2fd71730-bc33-40e1-8180-2737f8f394ce",{"type":25,"title":1749,"contentRole":28,"markdownContent":1750,"audioMediaId":1751},"Our Predictable Unpredictability","Behavioral economics reminds us that humans are complex and often unpredictable. Even the slightest change in wording can alter the way we perceive our options, making it difficult to find a one-size-fits-all solution to our problems.\n\nFurthermore, behavioral economics does not provide a guaranteed formula for interventions. Often, studies require a series of A/B testing to determine the effectiveness of specific methods, adding another layer of complexity to the field.\n\n![Graph](image://53f04cfa-e22b-486e-9a41-2d0142dd6424 \"Example of A-B testing on a website. Image: Maxime Lorant, CC BY-SA 4.0 \u003Chttps://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons\")\n\nCompared to the simplicity and elegance of conventional economics, behavioral economics can be seen as clunky, made up of different parts that require careful assembly. Whether this is a feature or a bug of behavioral economics remains to be seen, and is a topic of ongoing debate within the field.","00084392-866b-4352-b8fe-b2c3dc6f823d",[1753],{"id":1754,"data":1755,"type":54,"version":25,"maxContentLevel":37},"33c6b4c1-87fe-468e-b640-5de6f6ab234a",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1756,"multiChoiceCorrect":1758,"multiChoiceIncorrect":1760},[1757],"What is a characteristic of behavioral economics compared to conventional economics?",[1759],"It can be seen as clunky, made up of different parts that require careful assembly",[1761,1762,1763],"It is simpler and more elegant","It provides a guaranteed formula for interventions","It is less complex and more predictable",{"id":1765,"data":1766,"type":25,"maxContentLevel":37,"version":25,"reviews":1770},"0c30d0b1-d7d4-46e2-bfe5-7190035999f3",{"type":25,"title":1767,"contentRole":28,"markdownContent":1768,"audioMediaId":1769},"Scalability and Replicability","With its roots in psychology, behavioral economics has not been immune to the replication crisis that has affected the field of psychology. This has raised questions about the reliability and generalizability of findings in the field.\n\nAs well, behavioral economics acknowledges that our decision making is influenced by our histories and contexts. This means that some biases may be more prevalent in certain cultures than in others. For instance, researchers have found varying levels of loss aversion across culture and social status..\n\nSimilarly, interventions that are effective in one social or cultural context may not be applicable in another. This highlights the challenges of scalability and replicability in behavioral economics, and the need for careful consideration of context in the application of its principles.","8f1a51e0-081e-4511-b0ad-f401c04c05fe",[1771],{"id":1772,"data":1773,"type":54,"version":25,"maxContentLevel":37},"9f2694e3-b1ad-4f03-9d63-4361864af7f5",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1774,"multiChoiceCorrect":1776,"multiChoiceIncorrect":1778},[1775],"In the context of behavioral economics, what does the term 'replicability' refer to?",[1777],"Ability to reproduce results",[1779,1780,1781],"Ability to understand results","Ability to predict results","Ability to analyze results",{"id":1783,"data":1784,"type":25,"maxContentLevel":37,"version":28,"reviews":1788},"03d4234a-07d9-4f56-9b0c-777e4fbbacd7",{"type":25,"title":1785,"contentRole":28,"markdownContent":1786,"audioMediaId":1787},"Fix the System, Not the Individual","Behavioral economics focuses on how individuals make decisions, and its solutions often prioritize modifying individual behavior. However, this focus on the individual has been criticized for shifting attention away from systemic problems.\n\nInstead of asking why people choose unhealthy food, for example, those in power might instead work on making healthy foods more accessible and affordable. Instead of asking why women accept salaries that are lower than their male equivalents, perhaps it would be better to focus on the structural inequalities that have created that situation, rather than the behaviors of individuals. Understanding the reason behind people’s behavior is a good starting point but is insufficient if one wants to achieve true change.\n\n![Graph](image://2d3b0840-d5d8-4974-b23b-39ea82c6f815 \"Affordable punnets of fruit. Image: \nPim Van Wingerden, CC BY 3.0 \u003Chttps://creativecommons.org/licenses/by/3.0>, via Wikimedia Commons\")\n\nNick Chater and George Loewenstein, in particular, have proposed the distinction between an ‘i’ (individual) frame versus an ‘s’ (system) frame. They suggest that focusing on the system frame may drive change on a wider scale and have a larger impact. This criticism highlights the need for a balanced approach that considers both individual and systemic factors in addressing economic challenges.","8e992d4a-6085-4d05-b380-7ae72169e62d",[1789],{"id":1790,"data":1791,"type":54,"version":25,"maxContentLevel":37},"7cd30f4d-9f08-42d0-a8b9-fad163cf8e07",{"type":54,"reviewType":37,"spacingBehaviour":25,"multiChoiceQuestion":1792,"multiChoiceCorrect":1794,"multiChoiceIncorrect":1796},[1793],"What is the criticism of focusing only on individual behavior in behavioral economics?",[1795],"It shifts attention away from systemic problems",[1797,1798,1799],"It is too complex","It is not scientifically valid","It is too individualistic",{"left":4,"top":4,"width":1801,"height":1801,"rotate":4,"vFlip":6,"hFlip":6,"body":1802},24,"\u003Cpath fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"m9 18l6-6l-6-6\"/>",{"left":4,"top":4,"width":1801,"height":1801,"rotate":4,"vFlip":6,"hFlip":6,"body":1804},"\u003Cg fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\">\u003Cpath d=\"M12.586 2.586A2 2 0 0 0 11.172 2H4a2 2 0 0 0-2 2v7.172a2 2 0 0 0 .586 1.414l8.704 8.704a2.426 2.426 0 0 0 3.42 0l6.58-6.58a2.426 2.426 0 0 0 0-3.42z\"/>\u003Ccircle cx=\"7.5\" cy=\"7.5\" r=\".5\" fill=\"currentColor\"/>\u003C/g>",1778179487573]