1.2 Individual economic decision making

Question 1

utility

Answer 1

satisfaction or benefit from consumptiom

Question 2

rational consumer

Answer 2

maximise utility/satisfaction

Question 3

marginal utility

Answer 3

utility gained from additional consumption

Question 4

diminishing marginal utility

Answer 4

consume more, gain less for each unit

Question 5

asymmetric information

Answer 5

one agent knows more than the other, giving them power in the transaction

Question 6

bounded rationality

Answer 6

try to be rational but cant due to imperfect information

Question 7

bounded self-control

Answer 7

have good intentions but lack self discipline

Question 8

rules of thumb

Answer 8

shortcuts in thinking

Question 9

anchoring

Answer 9

rely on particular pieces of information when making decisions

Question 10

availability bias

Answer 10

make judgements on probability from recent events

Question 11

social norms

Answer 11

influence of others on decisions

Question 12

altruism and fairness

Answer 12

motivated to do the right thing

Question 13

choice architecture

Answer 13

how choices are presented

Question 14

framing

Answer 14

how information is worded

Question 15

nudges

Answer 15

gentle suggestions influence decisions

Question 16

default choice

Answer 16

people choose default options

Question 17

mandated choice

Answer 17

legal requirement to make a choice

Question 18

restricted choice

Answer 18

limited number of options