1.2.4 Behavioural economics and economic policy

Question 1

choice architecture

Answer 1

influencing consumer choices by the way the choices are presented.
e.g. opt-out instead of in of organ donation, causes higher percentage of organ donators

Question 2

Framing

Answer 2

form of choice architecture that influences choices by the way words and numbers are used, e.g. presenting life insurance premium payments as ‘less than £3 per day’ sounds more palatable than £1000 per year.

Question 3

Nudges

Answer 3

influencing consumer behaviour via the use of gentle suggestions and positive reinforcement

Question 4

Default choice

Answer 4

influencing consumer behaviour by setting socially desirable choices as default options.

Question 5

Mandated choice

Answer 5

where people are legally required to make a choice.
e.g. organ donatio for driving licneces or passports

Question 6

Restricted choice

Answer 6

giving consumers a limited number of options when making a choice.
too much choice can sometimes ‘paralyse’ individuals from making an effective choice