The Text Suggests That Illusory Covariations Arise from the Fact

question 49

Multiple Choice

The text suggests that illusory covariations arise from the fact that participants

• A) base their covariation estimates only on a small sample of the data that are available to them.
• B) are generally dogmatic and make their judgments with little regard for the data.
• C) do not know how to compute covariation, so they use an estimation strategy that is little better than guessing.
• D) do not know how to make these judgments, so performance improves once participants gain some expertise.

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Definitions:

Interest Rate

The cost of borrowing money or the return on investment, expressed as a percentage of the principal.

Quantity Supplied of Loans

The total amount of loans lenders are willing to provide at a given interest rate during a specific time period.

Surplus

An excess of a product or resource that occurs when supply exceeds demand, often leading to lower prices.

Competition

The effort and striving between two or more independent rivals to secure the business of one or more third parties by offering the best possible terms.