Behavioural economics and economic policy

Question 1

how can we make people make better choices/decisions

Answer 1

Choice architect can change the choice architecture and nudge people towards better behaviour through the right framing

Question 2

define choice architecture

Answer 2

thelayoutof our availablechoices

Question 3

define nudges

Answer 3

a change inchoice architecture(the layout of choices), which doesnot restrict choices but does try to influence people’s behaviour.

Question 4

define framing

Answer 4

The way that the choice ispresented

Question 5

state the three main types of choices

Answer 5

• Default choice
• Restricted choice
• Mandated choice

Question 6

define Default choice

Answer 6

when someone is automatically enrolled into a certain choice

Question 7

define Restricted choice

Answer 7

when consumers are still able to choose between options but the difficulty of choosing some options is much higher than others

Question 8

define Mandated choice

Answer 8

when people are legally required to make a choice

Question 9

state the 3 ways Behavioural economics suggest that government/ policy makers can use to make better decisions

Answer 9

1. Choice architecture and nudges
2. Framing
3. Restricted choice policies