📚 Learning Guide
Behavioral Economics and Decision-Making
hard

How do social norms and the framing effect influence decision-making in behavioral economics, particularly when implementing behavioral nudges?

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Choose the Best Answer

A

By altering the perceived benefits of choices based on peer behaviors and presentation of options.

B

By ensuring that all choices are presented with equal framing to eliminate bias.

C

By prioritizing individual preferences over societal influences in decision-making.

D

By decreasing the number of choices available to limit decision fatigue.

Understanding the Answer

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Answer

Social norms and the framing effect play important roles in how people make decisions in behavioral economics. Social norms are the unwritten rules about how to behave in a group, and they can influence people to act in ways that align with what others do. For example, if many people in a community recycle, others may be more likely to recycle too, thinking it’s the right thing to do. The framing effect, on the other hand, refers to how the way information is presented can change our choices. For instance, if a health message says "90% of people who quit smoking live longer," it sounds more appealing than saying "10% of people who smoke die young," even though they convey similar information, leading to better decision-making when nudges are applied.

Detailed Explanation

Social norms shape how we see choices. Other options are incorrect because This answer suggests that all choices are shown the same way; This answer implies that personal choices are more important than what others think.

Key Concepts

Social norms
Framing effect
Behavioral nudges.
Topic

Behavioral Economics and Decision-Making

Difficulty

hard level question

Cognitive Level

understand

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