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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 introduced by Nassim Taleb describes how flawed stories of the past shape our views of the present and the future?
(a) Narrative fallacy.
(b) Availability fallacy.
(c) Ego fallacy.
(d) Confidence fallacy.

2. The author presents several examples in Chapter 26 that demonstrate that there is no loss aversion in what kinds of interactions?
(a) Routine commercial exchanges.
(b) Gambling exchanges.
(c) Large investments in similar firms.
(d) Non-material interactions.

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

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

5. What nineteenth-century British economist proposed the idea of a "hedonimeter"?
(a) Shane Frederick.
(b) Baruch Fischhoff.
(c) Francis Edgeworth.
(d) John List.

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. What term refers to the state that some artists experience in creative moments and other experience through films, books, etc.?

3. Who wrote the bestseller book Blink?

4. The author notes in Chapter 36 that "Caring for people often takes the form of concern for the quality of their stories, not for" what (744)?

5. With what economist did Kahneman and Thaler work closely in Vancouver?

Short Essay Questions

1. What is hindsight bias?

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

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

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

5. What are the three qualifications when deciding whether or not to accept a small risk with positive expected value?

6. What is a correlations coefficient?

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

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

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

10. What is the expected utility hypothesis?

(see the answer keys)

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