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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 term does the author apply to the idea that once you have accepted a theory and used it as a tool in your thinking, it is extremely difficult to notice its flaws?
(a) Narrative fallacy.
(b) The availability cascade.
(c) Theory-induced blindness.
(d) An anchoring effect.

2. Who proved mathematically that attempts to explain loss aversion by the utility of wealth are doomed to fail?
(a) John Gottman.
(b) Matthew Rabin.
(c) Bruno Frey.
(d) Richard Thaler.

3. In utility theory, the utilty of a gain is assessed by comparing what?
(a) The base rates of the subject.
(b) The axioms invested in the states of wealth.
(c) The heuristics of the subject.
(d) The utilities of two states of wealth.

4. Given the following information, what percentage of respondents answered Mr. Brown? "Mr. Brown almost never picks up hitchhikers. Yesterday he gave a man a ride and was robbed" and "Mr. Smith frequently picks up hitchhikers. Yesterday he gave a man a ride and was robbed" (666)?
(a) 88%.
(b) 95%.
(c) 45%.
(d) 16%.

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

Short Answer Questions

1. What aspect of the mind answers the question: "Does it hurt now" (734)?

2. What aspect of the mind answers the question: "How was it, on the whole" (734)?

3. Who first demonstrated the hindsight bias as a student in Jerusalem?

4. Who is the author of The Halo Effect?

5. 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?

Short Essay Questions

1. What did Tversky and Kahneman conclude in their study of pain during medical procedures?

2. What is hindsight bias?

3. What is the expected utility hypothesis?

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

5. How does the author suggest a person should go about hiring a sales representative for his firm using algorhythms?

6. What does "hedonimeter" refer to?

7. What is broad framing? What is narrow framing?

8. What is the principle of loss aversion?

9. What two different meanings does the author attribute to the word utility in Chapter 35?

10. What is an illusion of skill?

(see the answer keys)

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