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

Multiple Choice Questions

1. 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) 5%.
(d) 10%.

2. When did the CIA obtain information that al-Qaeda might be planning a major attack against the United States?
(a) September 9, 2001.
(b) January 2, 2000.
(c) March 12, 2001.
(d) July 10, 2001.

3. What term refers to the quality of being noticeable or important?
(a) Articulate.
(b) Salience.
(c) Endowment.
(d) Heuristic.

4. What label is given to the documented research showing a massive preference for selling winners rather than losers?
(a) Disposition effect.
(b) Narrative fallacy.
(c) Loss aversion.
(d) Endowment effect.

5. What is the conclusion of the paper "Trading is Hazardous to Your Health"?
(a) Both active traders and inactive traders earned similar returns.
(b) The speed of which trading correlates directly with loss aversion.
(c) The most active traders earned the highest returns while the least active traders earned low returns.
(d) The most active traders had the poorest results while the least active traders earned the highest returns.

6. 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) Endowment effect.
(b) Theory-induced blindness.
(c) The availability cascade.
(d) Narrative fallacy.

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

8. How many bus bombings occurred in Israel between December 2001 and September 2004?
(a) 9.
(b) 23.
(c) 16.
(d) 12.

9. Who is the author of A Random Walk Down Wall Street?
(a) Jim Collins.
(b) Baruch Fischhoff.
(c) Malcolm Gladwell.
(d) Burton Malkiel.

10. The author points out in Chapter 31 that professional golfers putt more successfully when doing what?
(a) Trying to achieve a birdie while ignoring the bogey.
(b) Avoiding a birdie rather than trying to achieve a bogey.
(c) Avoiding a bogey rather than trying to achieve a birdie.
(d) Trying to achieve a birdie while avoiding a bogey.

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

12. Who is the author of Clinical vs. Statistical Prediction: A Theoretical Analysis and a Review of the Evidence?
(a) Jerry I. Porras.
(b) Baruch Fischhoff.
(c) Paul Meehl.
(d) Malcolm Gladwell.

13. What is the title of the essay that Kahneman and Tversky wrote on the study of gambles?
(a) "Prospect Theory: An Analysis of Decision under Risk."
(b) "Introduction to Economics and Psychology."
(c) "The Perception of Causality."
(d) "Belief in the Law of Small Numbers."

14. Whose study on duration neglect and the peak-end rule involved a story of Jen, who died instantly in an automobile accident?
(a) Ed Dienter's.
(b) Christopher Hsee's.
(c) John Gottman's.
(d) Baruch Fischhoff's.

15. What psychologist conduted an experiment wherein he recruited fans of professional basketball and elicited judgments concerning the winner of the NBA playoffs?
(a) Nassim Taleb.
(b) Shane Frederick.
(c) Craig Fox.
(d) Larry Jacoby.

Short Answer Questions

1. Who was the director of the CIA when intelligence learned that al-Qaeda may be planning a major attack on the U.S.?

2. 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?

3. 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?

4. The author states in Chapter 25, "Gambles represent the fact that the consequences of choices are" what (526)?

5. The author states in the opening of Chapter 29, "Whenever you form a global evaluation of a complex object--a car you may buy, your son-in-law, or an uncertain situation--you" do what (600)?

(see the answer keys)

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