A Simple Model of Information Acquisition for Shopping Predicts That

question 34

Multiple Choice

A simple model of information acquisition for shopping predicts that, the larger the percentage of dealers in an area seen by the typical shopper, the _____ will be the dispersion of the prices _____ relative to their average.

• A)larger; the buyers pay
• B)larger; the dealers quote
• C)smaller; the buyers pay
• D)smaller; the dealers quote

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Definitions:

Heuristics

Mental shortcuts or rules of thumb that simplify decision making, often utilized when facing complex problems or incomplete information.

Reasoning

The mental activity of transforming information to reach conclusions.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Endowment Effect

The cognitive bias causing individuals to ascribe higher value to things merely because they own them.