Mario Knows That,over the Long Run,it Is in His Best

question 50

Multiple Choice

Mario knows that,over the long run,it is in his best interest to save at least 10% of his paycheck for retirement.However,each time he receives his weekly paycheck of $1,000,he ends up spending it all and not depositing any into a retirement account.Mario has resolved to contact his employer's human resources department to set up a 401(k) work-sponsored retirement account where the 10% would be deducted automatically from his paycheck before it is issued to him each week.It is apparent from this information that Mario realized that:

• A) his intertemporal decisions are inconsistent and he had to take action to make them consistent.
• B) his intertemporal decisions are consistent and he had to take action to make them inconsistent.
• C) it is better for him to handle sending money to a retirement account than to rely on his employer to send the money to a retirement account on his behalf.
• D) he should not be saving for retirement after all because his short-run preferences to spend his entire paycheck are perfectly indicative of his long-run preferences.
• E) he should not worry about the future anymore because it will take care of itself.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.