Firms That Automatically Enroll Their Employees in Retirement Plans, Giving

question 10

Multiple Choice

Firms that automatically enroll their employees in retirement plans, giving them the option to opt-out instead of to opt-in, is an example of a form of behavioral economics known as

• A)the endowment effect.
• B)network externality.
• C)nudges.
• D)anchoring.

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Definitions:

Insider Trading

Engaging in stock exchange transactions for personal benefit by exploiting confidential information, an act considered illegal.

Securities Exchange Act

A U.S. law regulating the trading of securities, aimed at protecting investors and maintaining fair and efficient markets.

Tipper

An individual who provides privileged, non-public information to another person, typically about securities trading.

Tippee

A person who receives inside information.