The Rational-Ignorance Effect Refers to the

question 130

Multiple Choice

The rational-ignorance effect refers to the

• A) lack of incentive voters have to become well-informed about candidates and issues because their vote is unlikely to affect the outcome of an election.
• B) fact that most people choose to become just as well-informed when making choices as consumers as they do when making choices as voters.
• C) lack of rational analysis on the part of voters when they choose not to become informed about candidates and issues even though this knowledge would produce great personal benefit to them.
• D) problem of not enough information being supplied to voters because politicians are not spending enough on campaign adds to inform voters of their positions on issues.

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Definitions:

High-frequency Traders

Investors who use powerful computers to execute large numbers of trades at very fast speeds, often attempting to exploit small price differences.

Market Liquidity

The extent to which a market allows assets to be bought and sold quickly without causing a significant change in their price.

Seasoned Equity Offering

The process where a company that has securities traded in a public market issues additional shares to the public.

Outstanding Shares

Outstanding shares refer to the total number of shares of a corporation that have been issued and are currently held by investors, including restricted shares owned by the company's insiders.