31. One major consequence of the overconfidence effect is that: A. Some peopl B.

Question

31. One major consequence of the overconfidence effect is that: A. Some peopl B. Someone could persist in pursuing a failed policy despite overwhelming evidence of the failure C. Bad decisions can be made because people will act without pausing to see whether their intuition is correct or not D. Some people may wrongly believe in their forecasting ability to predict future outcomes of risky investments le cannot correct a personal trait that might be causing th em to fail in many ventures 32. When students end up doing "all-nighters"just to finish a term paper, it illustrates the A. Planning fallacy B. Framing effect C. Hindsight bias D. Availability heuristic 33. Which of the following statements about the so-called "hedonic treadmill" is not true? A. It is a consequence of the fact that our brains are wired to notice changes rather than states B. An increase in consumption level will give a permanent increase in happiness C. It is the reason why people across a wide spectrum of incomes are found to be equally happy D. A one-shot increase in income will, in the long run, not affect people's sense of satisfaction 34. People's tendency to prefer the "default" option over other options is known in prospect theory as the: A. Anchoring effect B. Mental accounting effect C. Status quo bias D. Confirmation bias 35. Myopia and time-inconsistency are major stumbling blocks that behavioral economists have found in people's ability to make decisions that involve trade-offs between: A. Importing and exporting B. Work and leisure C. The private sector and the government D. The present and the future

Explanation / Answer

31)

Correct answer is (D)

Overconfidence leads to the believing in prediction that may cause heavy loss in future. Business investment is full of uncertainty, thus future cannot be predicted accurately. Believing that future prediction is fully correct would make investment risky.

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