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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. How is the decision contruction of narrow framing defined?
(a) Four simple decisions, considered separately.
(b) A single decision with four options.
(c) A single decision with two options.
(d) Two simple decisions, considered separately.

2. Who are the authors of Built to Last?
(a) Jim Collins and Jerry I. Porras.
(b) Keith Stanovich and Richard West.
(c) Baruch Fischhoff and Gary Klein.
(d) Christopher Chabris and Daniel Simons.

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

4. 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)?
(a) "Evaluate the normalcy of the events or subjects."
(b) "Assign weights to its characteristics."
(c) "Seek advice from experience."
(d) "Make immediate assumptions."

5. Consider the following sentence from Chapter 19 where the author describes people who "knew well before it happened that the 2008 financial crisis was inevitable" (385). What objectionable word does the author point out in this sentence?
(a) Inevitable.
(b) Knew.
(c) Before.
(d) Crisis.

Short Answer Questions

1. In utility theory, the utilty of a gain is assessed by comparing what?

2. The author notes in Chapter 30 that what "is similar to the psychology of terrorism" (619)?

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

4. Where was John von Neumann originally from?

5. 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?

Short Essay Questions

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

2. What is the principle of loss aversion?

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

4. What is the expected utility hypothesis?

5. How does the author describe regret in economics?

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

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

8. What is the principle of diminishing sensitivity?

9. What is a framing effect?

10. What story from Malcolm Gladwell's book Blink does the author present?

(see the answer keys)

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