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Microeconomics

David C. Colander

Chapter 22

Behavioral Economics and Modern Economic Policy - all with Video Answers

Educators


Chapter Questions

01:36

Problem 1

What is a coordination mechanism? Give an example.

KY
Kexin Yang
Numerade Educator
01:59

Problem 2

True or false? For a market to have a coordination mechanism, money must be exchanged. Explain.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
02:16

Problem 3

True or false? Only money prices affect incentives; shadow prices do not. Explain.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:32

Problem 4

What is the incentive compatibility problem? Give an example.

Harsh Gadhiya
Harsh Gadhiya
Numerade Educator
01:04

Problem 5

What is the primary task of a mechanism design economist?

Daniel Cisneros
Daniel Cisneros
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03:06

Problem 6

How did mechanism design lead to behavioral economics?

David Gagnon
David Gagnon
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01:24

Problem 7

Can a model that includes just money price miss relevant prices? Why or why not?

Lucas Finney
Lucas Finney
Numerade Educator
02:53

Problem 8

How is choice architecture related to behavioral economics and mechanism design?

Daniel Cisneros
Daniel Cisneros
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00:36

Problem 9

Behavioral economics is a new field in economics. Are nudges new too?

Jessica Reyna
Jessica Reyna
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04:17

Problem 10

What is a nudge policy? Give an example.

Omkar Katta
Omkar Katta
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01:26

Problem 11

How can a nudge be defined as libertarian?

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
04:17

Problem 12

In what way is nudge policy paternalistic?

Omkar Katta
Omkar Katta
Numerade Educator
03:13

Problem 13

Two people are given the choice to participate in a retirement program in which the firm matches contributions. Person $A$ is given a form on which she must check a box to opt into the retirement program. Person $\mathrm{B}$ is given a form on which she must check a box to opt out of the retirement program. According to studies, which person is more likely to participate? Or are both equally likely to participate? Explain your answer.

AG
Ankit Gupta
Numerade Educator
02:03

Problem 14

What are three types of choices in which nudges are useful?

Ameer Said
Ameer Said
Numerade Educator
02:17

Problem 15

Why is a nudge useful for choices where benefits and costs are separated by time?

Ameer Said
Ameer Said
Numerade Educator
01:29

Problem 16

Why, in the traditional model, is a nudge unnecessary but potentially helpful in the behavioral model?

John Nicolle
John Nicolle
Numerade Educator
04:33

Problem 17

Classify the following nudges as either a "potentially advantageous default nudge," an "information or encouragement nudge," or "not a nudge." $(L O 22-2)$
a. A firm redesigns its health enrollment form so that employees must explicitly choose to forgo health insurance.
b. Your local city sends you an annual report of average water usage per resident with your actual usage along with tips for conserving water.
c. Government raises the taxes on gasoline to reduce pollution.
d. A consumer-advocacy group sets up a site with a side-by-side comparison of auto insurance cost based on estimated risk of drivers.

Shannon Merkle
Shannon Merkle
Numerade Educator
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Problem 18

Government has provided a way for people to file their tax returns on the Internet to make filing easier and raise compliance. Is this an example of a libertarian paternalistic policy? Explain your answer.

Rashmi Sinha
Rashmi Sinha
Numerade Educator
01:53

Problem 19

What distinguishes a nudge from a push?

Rithvik Manne
Rithvik Manne
Numerade Educator
01:13

Problem 20

Why would push instead of nudge policies be required?

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
01:47

Problem 21

Identify the following as either a nudge, a push, or neither. $(L O 22-3)$
a. The cover of your state tax forms reports that 90 percent of residents pay taxes on time.
b. If your friends gain weight, you are likely to gain weight too.
c. Amazon is required by government to set the default mail option as the standard mail rate.
d. Government taxes in part to redistribute income.
e. A health insurer issues participants credits for exercising and eating healthy foods that they can use to buy products.

Mayukh Banik
Mayukh Banik
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01:57

Problem 22

How is conspicuous consumption an example of the importance of relative materialism to one's happiness?

Breanna Ollech
Breanna Ollech
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01:57

Problem 23

How might conspicuous consumption lower total happiness?

Breanna Ollech
Breanna Ollech
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01:11

Problem 24

What are four reasons to be cautious about nudges?

Narayan Hari
Narayan Hari
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05:25

Problem 25

Why aren't there many libertarian nudge policies?

Tommy Nguyen
Tommy Nguyen
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01:11

Problem 26

Assume that government proposes that all employees must be presented with the choice of opting out of a retirement saving program. What assumptions are necessary for this to be a true nudge? Are they reasonable assumptions?

Jennifer Stoner
Jennifer Stoner
Numerade Educator