Behavioral Decision Theory (BDT) focuses on how consumers:
A) Make perfectly rational decisions
B) Always follow economic models
C) Actually make choices in real-world settings
D) Avoid psychological biases
Answer: C

In behavioral economics, which factor often distorts rational consumer decision-making?
A) Perfect information
B) Cognitive biases
C) Unlimited time
D) Perfect self-control
Answer: B

Which of the following is a common cognitive bias discussed in behavioral economics?
A) Anchoring
B) Market equilibrium
C) Supply chain optimization
D) Perfect competition
Answer: A

The endowment effect refers to consumers:
A) Valuing products they own more highly than those they do not
B) Preferring new brands
C) Always choosing the lowest price
D) Ignoring sunk costs
Answer: A

In BDT, loss aversion means consumers:
A) Are risk-loving
B) Value losses more than equivalent gains
C) Seek out losses
D) Ignore emotional responses
Answer: B

Bounded rationality suggests consumers:
A) Always maximize utility
B) Use limited information and shortcuts to make decisions
C) Avoid making choices
D) Always process all available information
Answer: B

The “availability heuristic” describes a tendency to:
A) Rely on information that is easy to recall
B) Seek complex data
C) Ignore past experiences
D) Focus on unavailable options
Answer: A

Behavioral economics recognizes that consumer decisions are influenced by:
A) Psychological, social, and emotional factors
B) Only price and income
C) Supply and demand curves
D) Strict market regulations
Answer: A

In BDT, “framing” refers to:
A) The way choices are presented
B) Fixed product pricing
C) Total market share
D) Production costs
Answer: A

Which effect can cause consumers to stick with default choices even if better options exist?
A) Sunk cost effect
B) Default effect
C) Anchoring effect
D) Scarcity bias
Answer: B

Overconfidence bias leads consumers to:
A) Accurately assess their knowledge
B) Overestimate their ability to make good decisions
C) Ignore their own preferences
D) Rely on others’ advice
Answer: B

Which theory describes how people value potential losses and gains differently?
A) Expected utility theory
B) Prospect theory
C) Market equilibrium theory
D) Rational choice theory
Answer: B

Heuristics are:
A) Complex statistical models
B) Simple rules of thumb for making decisions
C) Ways to ignore advertising
D) Laws regulating markets
Answer: B

Sunk cost fallacy refers to:
A) Ignoring previous investments
B) Continuing a behavior due to previously invested resources
C) Focusing only on future benefits
D) Disregarding initial pricing
Answer: B

Choice overload can result in:
A) Faster decision making
B) Decision paralysis or less satisfaction
C) Improved customer loyalty
D) More rational choices
Answer: B

Which of the following is NOT a principle of behavioral economics?
A) People act fully rationally at all times
B) Decisions are shaped by context
C) Emotions affect purchasing
D) Shortcuts (heuristics) guide many decisions
Answer: A

The “anchoring effect” influences decisions by:
A) Starting from an initial value and adjusting insufficiently
B) Comparing all options equally
C) Ignoring reference points
D) Focusing only on emotional responses
Answer: A

In marketing, “nudging” refers to:
A) Forcing customers to buy
B) Subtly guiding choices without restricting options
C) Discounting products sharply
D) Legal mandates
Answer: B

Confirmation bias in consumer behavior means:
A) Seeking information that challenges beliefs
B) Giving equal weight to all information
C) Focusing on information that supports one’s preconceptions
D) Ignoring prior experiences
Answer: C

The “scarcity principle” in behavioral economics suggests:
A) Unlimited supply increases demand
B) Scarce items are perceived as more valuable
C) Overabundance increases utility
D) Price has no effect on value perception
Answer: B

Mental accounting refers to:
A) Treating all money as equally valuable
B) Separately coding money into mental categories
C) Ignoring budgets
D) Spending without planning
Answer: B

Which statement best reflects the impact of social proof in decision-making?
A) Consumers ignore others’ choices
B) People tend to follow the behavior of others
C) Social influence does not affect purchases
D) Decisions are always made in isolation
Answer: B

Behavioral economics is different from classical economics because it:
A) Assumes perfect rationality
B) Considers psychological influences
C) Ignores consumer motivation
D) Relies solely on mathematical models
Answer: B

Temporal discounting in behavioral economics means:
A) Valuing future rewards equally to present ones
B) Overvaluing immediate rewards versus future ones
C) Ignoring time in decision making
D) Always planning long-term
Answer: B

In BDT, “risk aversion” typically leads to:
A) Preference for uncertain options
B) Avoidance of risky choices
C) Seeking out maximum risk
D) Ignoring losses
Answer: B

A marketer applying behavioral economics might:
A) Remove all context from product choices
B) Present a “decoy” product to shift preferences
C) Ignore emotional responses
D) Assume consumers act rationally
Answer: B

The “status quo bias” leads consumers to:
A) Seek change actively
B) Prefer current conditions or choices
C) Try all new products
D) Switch brands frequently
Answer: B

Which best exemplifies the use of framing in marketing?
A) Stating a yogurt is “90% fat free” instead of “10% fat”
B) Providing product information in small print
C) Hiding prices
D) Listing features alphabetically
Answer: A

“Herd behavior” refers to:
A) Buying based on personal preferences only
B) Imitating the actions of a larger group
C) Avoiding trends
D) Ignoring social influence
Answer: B

Behavioral economics has shown that consumer choices are often:
A) Completely rational and self-interested
B) Shaped by emotions, context, and biases
C) Based only on perfect information
D) Driven only by price
Answer: B