2 Starting to Misbehave 4. According to Thaler, what two things give economics its reputation as the most powerful socia

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2 Starting to Misbehave
4. According to Thaler, what two things give economics its
reputation as the most powerful social science ? Circle 2 items
from the list . (2 points)
A. More students than any other social science , and nearly 100%
of those students find jobs as economists.
B. Economists have a virtual monopoly on giving policy
advice
C. Economics professors are paid more than professors of other
fields, including business administration professors, f inance
professors, and human biology professors.
D. Intellectual power is derived from the fact that economics
has a unified, core theory from which everything else follows.
5. Thaler describes economics as the sum of two parts. One is
Optimization. What is the other part? (1 point) Economics =
Optimization + _______________________
3.Thaler provides three criticisms of the homo economicus model.
The first of these is " SIFs. " What are the other two? Circle 1
answer, (1 Point)
A. SIFS, utility functions, and wealth constraints
B. SIFS, unbiased beliefs, and difficulty solving the
optimization problem
C. SIFS, natural experiments, and randomized trials
D. SIFS, supposedly irrelevant factors, and short interframe
space
4. What is a SIF, and what is the significance of the following
quote from Misbehaving? "On the next assignment, I made the number
of points a vailable 137, instead of 100. This
assignment turned out to be harder than the first, with
students getting only 70% of the answers right, but the average
turned out to be a cheery 96 points." ( 1 point)
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5. While developing the Fisher general equilibrium model, we
assumed that the endowment could be in cash or in goods with the
same market value. Does Thaler think this is valid? Support your
answer with an example of the endowment effect. ( 1 point)
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6. Thaler suggests that " Money Illusion, " a topic discussed by
Irving Fisher, is a form of human behavior violating the
assumptions of homo economicus. Define the term money illusion and
provide an example illustrating the problem