Economists Assume That Individuals

question 81

Multiple Choice

Economists assume that individuals

• A)behave in unpredictable ways.
• B)will never take actions to help others.
• C)prefer to live in a society that values fairness above all else.
• D)are rational and respond to incentives.

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Definitions:

Bounded Rationality

A concept suggesting that in decision-making, individuals are limited by the information they have, their cognitive limitations, and the finite amount of time they have to make a decision.

Limited Information

A scenario where decision-makers have only a partial view or incomplete data about a situation or problem.

Heuristics

Mental shortcuts that allow people to solve problems and make judgements quickly and efficiently.

Availability Heuristic

Availability heuristic is a mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.