Behavioural Economics

Question 1

According to traditional economics, a rational consumer will…

Answer 1

Gather and weigh up all information to take time and make a utility maximising decision

Question 2

Bounded rationality

Answer 2

Consumers may not always have time, too large choice or a lack of information which may prevent them from maximising their utility

Question 3

Bounded self control

Answer 3

Self control whit much prevents decisions from maximising utility

Question 4

Anchoring

Answer 4

Cognitive bias for humans tending to latch onto first piece of information offered

Question 5

Economic sanctions

Answer 5

Restrictions imposed- regulation or laws

Question 6

Nudge

Answer 6

Forms/patterns of behaviour considered acceptable by society

Question 7

Choice architecture

Answer 7

Default choice- an option which is automatically selected unless an alternative is selected
Restricted choice- limited choices to reduce over complexity of a situation