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This test consists of 5 multiple choice questions, 5 short answer questions, and 10 short essay questions.

Multiple Choice Questions

1. 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?
(a) John Gottman.
(b) Paul Rozin.
(c) Bruno Frey.
(d) Richard Thaler.

2. The author states in Chapter 25, "Gambles represent the fact that the consequences of choices are" what (526)?
(a) "Axioms."
(b) "Predictable."
(c) "Never certain."
(d) "Foreseeable."

3. One of the decision problems that Kahneman and Tversky examined (as discussed in Chapter 25) was whether one would choose a coin toss in which the winner wins $100 or what?
(a) Losing $20.
(b) Getting $80 for certain.
(c) Getting $46 for certain.
(d) Losing $50.

4. 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) "Risk seeking behavior causes extremely loss aversive choices."
(c) "Loss aversion causes narrative fallacies."
(d) "Diminishing sensitivity causes risk seeking."

5. Where was John von Neumann originally from?
(a) Spain.
(b) Austria-Hungary.
(c) Israel.
(d) France.

Short Answer Questions

1. What method is referred to by the author with the acronym DRM?

2. What psychologist conduted an experiment wherein he recruited fans of professional basketball and elicited judgments concerning the winner of the NBA playoffs?

3. What nineteenth-century British economist proposed the idea of a "hedonimeter"?

4. What dean of the University of Chicago Graduate School of Business was a firm believer in standard economic theory?

5. How are decision weights and probabilities regarded in utility theory?

Short Essay Questions

1. How is evaluation defined as a principle of prospect theory?

2. What is the principle of loss aversion?

3. Why does Kahneman cite the book Expert Political Judgment: How Good Is It? Who wrote this book?

4. What is the initial gamble that Paul Samuelson famously asked a friend?

5. What is the principle of diminishing sensitivity?

6. Why was Kahneman astonished upon reading an essay by Bruno Frey?

7. What evidence was presented by Ed Diener and his team when examining vacations?

8. How do prospect theory and utility theory differ?

9. What is an illusion of skill?

10. What is a correlations coefficient?

(see the answer keys)

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