Quiz on Mental Shortcuts and Cognitive Biases in Decision Making

What is a cognitive bias according to the document?. A random error in thinking. A systematic error in thinking. A deliberate attempt to deceive. A method of formal logic.

Which of the following is NOT mentioned as a type of cognitive bias?. Availability. Representativeness. Overconfidence. Optimism.

What does the overconfidence effect cause people to believe?. They are average at a given field. They are below average at a given field. They are better at a given field than the average person. They are not interested in the field.

Who is mentioned as having studied overconfidence in economics for the first time?. A. Smith. M. Alpert and H. Raiff. B. Fischhoff, P. Slovic and S. Lichtenstein. A. Galasso and S. Simcoe.

Who stated the quote "The overweening conceit which the greater part of men have of their own abilities is an ancient evil remarked by the philosophers and moralists of all ages"?. M. Alpert. H. Raiff. A. Smith. B. Fischhoff.

Overconfidence can manifest in how many ways, according to the document?. 2. 3. 4. 5.

Which of the following is NOT a way that overconfidence manifests?. The effect of above-average. The effect of calibration. The effect of the illusion of control. The effect of logical reasoning.

What does the calibration effect refer to?. The ability to predict market trends. The belief in the precision of one's knowledge. The ability to accurately assess risk. The effect of above average knowledge.

Who are the professions mentioned to experience the calibration effect?. Doctors and financial analysts. Engineers and lawyers. Entrepreneurs and managers. Psychologists and nurses.

What is a consequence of investors' excessive self-confidence?. Underestimation of downside risk. Accurate market predictions. Lower belief in investment opportunities. Ignoring the potential for profit.

What is given as a classic example of overconfidence?. The dot-com bubble. The 2008 financial crisis. The Great Depression. The tulip mania.

What is the illusion of control?. The belief that one's actions can influence a random event. The ability to control others' decisions. The understanding of market trends. The ability to control one's emotions.

What is the result of a stronger sense of control?. Taking fewer risks. A more pessimistic assessment of reality. Taking more risky actions. Loss of self-confidence.

In the experiment with the tickets, which group was willing to pay a higher price for the ticket?. The group who drew their own tickets. The group who did not draw their tickets. Both groups paid the same. Neither group was willing to pay.

In the experiment with the dice, how did the players behave?. They rolled the dice the same way regardless. If the goal was to roll a higher number, they threw harder. If the goal was to roll a lower number, they threw harder. The experiment does not mention dice.

In The Experiment, what percentage of players chose scenario I?. 25%. 67%. 50%. 80%.

What does excessive optimism lead to?. Realistic planning. Unjustified optimism. Risk aversion. Accurate risk assessment.

What happens in the financial market according to the document?. New players expect lower rates of return. New players assume they can outplay the market. Experienced players are always correct. The market is random.

According to research, what percentage of new companies survive 5 years?. 25%. 50%. 75%. 80%.

What do entrepreneurs estimate the chances of survival for their businesses at?. 25%. 50%. 75%. 80%.

What does research by A. Galasso and others indicate excessive optimism leads to?. Lowered R&D expenditure. Implementation of more demanding business strategies. Decreased spending on marketing. Stagnation in business development.

What is the most common and potentially catastrophic problem in judgment and decision-making?. Indecisiveness. Overconfidence. Fear. Lack of information.

What phenomenon supports overconfidence?. Hindsight bias. Self-attribution. Groupthink. Loss aversion.

What is the so-called "hindsight bias" associated with?. Underestimation of risk. The belief that unexpected events are predictable. Overestimation of personal skills. Aversion to risk.

What is the framing effect?. Analysis and decision-making in isolation from the broad context. The ability to create a good marketing campaign. The capacity to accurately assess risk. The ability to persuade other people.