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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. 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 the firm is a new firm or an old firm.
(c) Whether the firm has many stockholders or few.
(d) Whether others invested in the stock have faith in its ability to produce.

2. In one example provided by the author in Chapter 31, he establishes two sports fans going to a game while facing a blizzard. One bought his ticket and the other one got his for free from a friend. The author asserts that the fan who paid is more likely to drive. What provides the explanation for this assertion?
(a) The availability cascade.
(b) Mental accounting.
(c) Narrative fallacy.
(d) An anchoring effect.

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

4. Who is the author of Introduction to the Principles of Morals and Legislation?
(a) Shane Frederick.
(b) John List.
(c) Jeremy Bentham.
(d) Baruch Fischhoff.

5. Who was the anesthesiologist who intervened regarding physicians' and midwives' clinical judgment to determine whether a baby faced breathing distress?
(a) Danny Oppenheimer.
(b) Virginia Apgar.
(c) Baruch Fischhoff.
(d) Malcolm Gladwell.

Short Answer Questions

1. What term refers to the quality of being noticeable or important?

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

3. How is the decision construction of broad framing defined by the author?

4. How are decision weights and probabilities regarded in prospect theory?

5. What organization paid for Thaler to spend a year working with Kahneman in Vancouver?

Short Essay Questions

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

2. What is hindsight bias?

3. Why does the author credit Virginia Apgar with saving the lives of many infants?

4. What is a correlations coefficient?

5. What does "hedonimeter" refer to?

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

7. How does the author describe regret in economics?

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

9. How did Nassim Taleb define the term narrative fallacy in The Black Swan?

10. What is flow?

(see the answer keys)

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