Our discussion of the day care example from Freakonomics was meant to illustrate

Question

Our discussion of the day care example from Freakonomics was meant to illustrate what concept from behavioral economics? Individuals always respond to financial incentives as predicted by traditional economic theory Individuals acting in their own best interest will always maximize efficiency in the market Individuals make decisions based on many factors, and some of these factors are nonmonetary All of the above are demonstrated in this example The idea of bounded rationality can best be described by which of the following: Economic decision-makers typically act rationally in all decisions Economic decision-makers are capable of making rational decisions within the limits of factors such as mental capacity and time available to make the decision Economic decision-makers rarely act rationally when making decisions Economic decision-makers only act rationally when they are physically tied to a chair

Explanation / Answer

8.d. All of the above are demonstrated in this example.

9. b. Eonomic decision- makers are capable of making rational decisions within the limits of factors such as mental capacity and time available to make the decision.

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