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exam 2 answer key

exam 2 answer key - Name PPE 203/PSYC 265 EXAM 2 BOUNDED...

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Name ________________________________ PPE 203/PSYC 265 EXAM 2 – BOUNDED WILLPOWER You have until 4:25. Each item gives the number of points it is worth. 60 points total. 1) Matching : Next to each item below, place the letter of the concept that best matches and/or explains it. Letters could be used more than once or not at all. 3 points each, 27 total A. Present bias B. Naïve diversification C. Diversification Heuristic (choice over time) D. Temptation Goods E. Mental accounting F. Hot/Cold Empathy gaps _ B _ Using the 1/n rule From slides; if you offer me n funds, I will divide my savings 1/ n to each. _ E _ Maintaining simultaneous savings and credit card debt We saw a few examples where this could be explained by mental accounting _ E _ Treating money like it isn’t fungible The quintessence of mental accounting: labeling dollars for specific purposes _ A _ Constant difference effects From slides, the delay before a choice between two bundles that are separated by a fixed amount of time matters. Now and t periods from now is not the same as n and n + t periods from now, n > 1. _ C _ Choosing more variety when picking all at once for the future than when picking one each period This could serve as a definition for the diversification heuristic _ E _ This one could only apply to sophisticates Mental accounting as a self-control strategy would only be appreciated by sophisticates, everything else is either unrelated to the β-δ model or applies to both types (present bias) _ B _ Allocating more money to stocks when your retirement savings program offers more stock funds A consequence and/or extension to the 1/ n rule _ F _ Believing that being stranded without water would be worse right after working out than right before Easier to empathize with how bad it would feel when you are hot and tired _ E _ Could explain why charities market the cost of helping as “pennies a day” Bracketing the choice narrowly (daily) so that the donation can be thought of as coming from petty cash rather than having to be posted to some account
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Name ________________________________ 2) Tonya likes potato chips. At time 0 (now), she can buy a small (1-serving) or large (2-serving) bag of potato chips. If she buys the small bag, she will eat one serving at time 1. If she buys the large bag, she can eat two servings at time 1, or eat one and save one for later. The large bag is cheaper per unit, so
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