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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. In assessing the stock market, the author asserts that skill in evaluating the business prospects of a firm is not sufficient for stock trading. Traders often lack the skill to answer what crucial question?
(a) Whether the information about the firm is already incorporated in the price of its stock.
(b) Whether others invested in the stock have faith in its ability to produce.
(c) Whether the firm is a new firm or an old firm.
(d) Whether the firm has many stockholders or few.

2. Who was the Nobel Prize-winning economist that proposed a theory where utility are attached to changes of wealth rather than to states of wealth?
(a) Bruno Frey.
(b) John Gottman.
(c) Harry Markowitz.
(d) Richard Thaler.

3. The author offers a scenario in which a subject purchases a $200 concert ticket to see their favorite band. They find that others are offering $3,000 for the ticket, but they do not sell it. What is this an example of?
(a) Narrative fallacy.
(b) Endowment effect.
(c) Theory-induced blindness.
(d) The availability cascade.

4. Who is the heroine of La Traviata who dies after sacrificing for love?
(a) Maria.
(b) Anna.
(c) Violetta.
(d) Sarah.

5. Who wrote the article "The Robust Beauty of Improper Linear Models in Decision Making"?
(a) Malcolm Gladwell.
(b) Robyn Dawes.
(c) Baruch Fischhoff.
(d) Jim Collins and Jerry I. Porras.

6. Who was concluded to achieve better investment results in "Boys Will Be Boys"?
(a) Bankers.
(b) Professors.
(c) Men.
(d) Women.

7. What well-known expert in marital relations estimated that a stable relationship requires good interactions outnumber bad interactions by at least 5 to 1?
(a) Richard Thaler.
(b) John Gottman.
(c) Gary Klein.
(d) Bruno Frey.

8. In the following example from Chapter 30, the author posits the following in regards to a person choosing a marble from an urn. The red marbles win a prize. "Urn A contains 10 marbles, of which 1 is red. Urn B contains 100 marbles, of which 8 are red" (631). What are the chances of winning in Urn A?
(a) 30%.
(b) 20%.
(c) 10%.
(d) 5%.

9. To whom is the following quote attributed: "The agent of economic theory is rational, selfish, and his tastes do not change" (525)?
(a) Richard Thaler.
(b) Gary Klein.
(c) John Gottman.
(d) Bruno Frey.

10. In discussing the stock market, the author states that if all the assets in a market are correctly priced, it leaves no scope for cleverness but it also does what?
(a) Enacts executive control.
(b) Creates an availability cascade.
(c) Protects fools from their own folly.
(d) Creates definitive axioms.

11. Who coined the term "Econs and Humans"?
(a) Bruno Frey.
(b) Gary Klein.
(c) John Gottman.
(d) Richard Thaler.

12. Who is the finance professor at U.C. Berkeley who created a study wherein he examined the trading records of 10,000 brokerage accounts of individual investors over a seven-year period?
(a) Jim Collins.
(b) Terry Odean.
(c) Baruch Fischhoff.
(d) Malcolm Gladwell.

13. According to the author in Chapter 26, "In bad choices, where a sure loss is compared to a larger loss that is merely probable," what is the result (552)?
(a) "Loss aversion causes extremely risk-averse choices."
(b) "Diminishing sensitivity causes risk seeking."
(c) "Risk seeking behavior causes extremely loss aversive choices."
(d) "Loss aversion causes narrative fallacies."

14. What aspect of the mind answers the question: "Does it hurt now" (734)?
(a) The remembering self.
(b) The loss-aversive self.
(c) The anchoring self.
(d) The experiencing self.

15. How many fatalities came about as a result of bus bombings in Israel between December 2001 and September 2004?
(a) 135.
(b) 236.
(c) 23.
(d) 366.

Short Answer Questions

1. In Introduction to the Principles of Morals and Legislation, the author points out that "Nature has placed mankind under the governance of two sovereign masters" (728). What are these masters defined as?

2. When did the CIA obtain information that al-Qaeda might be planning a major attack against the United States?

3. What psychologist demonstrated disgust by relating that one cockroach could ruin the appeal of a bowl of cherries, but that one cherry would not do anything for a bowl of cockroaches?

4. The author states in Chapter 26, "In mixed gambles, where both a gain and a loss are possible," what happens (552)?

5. In the author's description of the cold-pressor experiment, how long were the trials separated?

(see the answer keys)

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