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30 Cards in this Set
- Front
- Back
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A researcher named Solomon Asch put students in groups and asked them to pick a line (from a set of three) that was the same length as a line given initially. which is correct?
a. The correct answer was obvious, but students often conformed to an incorrect majority b. The correct answer was obvious yet students always conformed to the majority c. The correct answer was very obvious and students chose the right line d. It was difficult to discern the correct answer so students were often confused |
a. the correct answer was obvious, but students often conformed to an incorrect majority
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Herding can be rational
a. true b. false |
a. true
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To the outside world, it seemed that the directors at Enron rubber-stamped anything brought before them. This is surprising because
a. it was a large board b. many were outside directors c. they were well paid d. all of the above |
d. all of the above
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Mark is a financial analyst who works at Merill Lynch and generates reports for the firm's clients. He would like to attract business for his firm and is a(n)
a. buy-side analyst b. independent analyst c. sell-side analyst |
a. buy-side analyst
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Some have argued that good moods resulting from morning sunshine lead to higher stock returns. People buy because the sunshine puts them in a good mood. The evidence convincingly proves that mood moves market in this way.
a. true b. false |
b. false
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A trust game is similar to an ultimatum game except that in the trust game the responder (or trustee) can choose to send some money back to the proposer (also called the investor) which of the following is true?
a. typically, trustees get almost nothing from the investors b. greater trust is observed in cultures with more active exchange c. there is little variation in trust even across cultures d. trust pays for most investors in that trustees return more than they keep |
b. greater is observed in cultures with more active exchange
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which of the following is an example of path-dependent behavior?
a. anchoring b. break-even effect c. familiarity heuristics d. all of the above are examples of path-dependent behavior |
b. break-even effect
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The disposition effect could be explained by
a. heuristics b. base rate fallacy c. risk avoidance d. emotions, such as regret |
d. emotions, such as regret
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The optimal board size will depend on the characteristics of the individual firms. However, in general, it is a good idea to have a majority of insiders.
a. true b. false |
b. false
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Stanley Milogram reported startling evidence on the impact of obedience to authority. Participants (the "teachers") punished the "learners" (actually actors) when an error was made. The study has been replicated many times, as reported in the ABC News presentation we viewed. Which of the following is true?
a. many participants said that loyalty drove their behavior b. few participants in Milgrom's original study administered significant shock to the "learner." c. Participants who delivered the maximum shock seemed to take responsibility for their actions. d. men were much more likely to deliver shock than women |
d. men were much more likely to deliver shock than women
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which statement is true?
a. Pride and regret are not emotions b. regret is a stronger emotion that disappointment c. regret and disappointment are positive emotions d. pride and regret have little impact on financial decisions. |
b. regret is a stronger emotion that disappointment
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"economic man" or homo economics is rational and self-interested. But, most people have other-regarding preferences. This means that most people
a. are solely consumed with maximizing wealth b. make choices that are bad for them in the long run c. are concerned about the welfare of others d. never make choices that are in their material self-interest |
c. are concerned about the welfare of others
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who is the primary provider of internal disapline to manager?
a. CEO b. SEC c. corporate board d. shareholders |
d. shareholders
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In an ultimatum game subject are anonymously paired. The proposer is given some money and decides how much to send the other players get nothing. Which of the following statements is true?
a. most proposer send almost nothing to the responder b. theory predicts that the responder will accept ant non-zero offer c. responders don't reject and offers d. the results indicate that people don't care what others think of them |
a. most proposers send almost nothing to the responder
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the disposition effect is the tendency to sell winners too early and hold on to losers too long.
a. true b. false |
a. true
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Prior to bankruptcy of Enron, financial analysts were optimistic about a firm
a. analysts may have wanted to keep up communication with managers b. analyst may have accepted managers' projections about the future of the firm c. analysts may have wanted to ensure that their firms continued to earn large investment banking fees d. all of the above are possible explanations for analysts' optimism |
d. all of the above are possible explanations for analysts' optimism
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________________ reflects how a person assesses something. it is the quality associated with a stimulus.
a. affect b. mood c. emotion d. social learning |
a. affect
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After a prior gain many are more willing to take risk. This is called
a. the house money effect b. the break-even effect c. the snake-bit effect d. mood maintenance |
a. the house money effect
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________________ is an extreme form of conformity.
a. groupthink b. altruism c. an outsider board d. a free rider |
a. groupthink
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Your aunt is upset because she lost a lot of money in the stock market after the recent financial crisis. She is not nervous about investing in the stock market and has moved her money to less risky investments like certificates of deposit. what is this?
a. house money effect b. break-even effect c. mood maintenance d. snake-bit effect |
d. snake-bit effect
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Herding behavior cannot be rational
a. true b. false |
b. false
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A corporate board with overlapping board membership is
a. interlocked b. independent c. an information intermediary d. nonconforming |
a. interlocked
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It is difficult for many shareholders to monitor managers themselves. Shirking shareholders are an example of
a. lack o interdependence b. a conflict of interest c. a free rider problem d. herding |
c. a free rider problem
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which of the following is an example of path-dependent behavior?
a. house money effect b. snake-bit effect c. contestants' choices on "deal or no deal?" d. all of the above are examples of path-behaviors |
d. all of the above are examples of path-behaviors
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"economic man" or homo economics is rational and self-interested. but, most people have other-regarding preferences. This means that most people
a. always make choices that are in their material self-interest b. are concerned about the welfare of others c. focus on what is good for them in the short run d. are solely consumed with maximizing wealth |
b. are concerned about the welfare of others
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Ryan is a financial analyst who works for a large insurance company and generates reports for internal purposes. He is a(n)
a. buy-side analyst b. independent analyst c. sell-side analyst |
a. buy-side analyst
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After a loss many people seem to value getting back to where they started so they take risky gambles the would not normally take. This is called
a. the snake-bit effect b. mood maintenance c. the house money effect d. the break-even effect |
d. the break-even effect
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path dependence in decisions
a. is incorporated in prospect theory b. means that decisions are affected by prior gains and losses c. explains why people are loss averse d. does not affect a person's risk tolerance |
b. means that decisions are affected by prior gains and losses
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The directors at Enron seemed to rubber-stamp anything brought before them. This may be because
a. they did not have proper incentives as they were low paid b. they were almost all inside directors c. they fell prey to groupthink d. it was a very small board |
c. they fell prey to groupthink
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The disposition effect can be explained by
a. risk aversion b. tax avoidance c. regret avoidance d. base rate fallacy |
c. regret avoidance
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