CAT Practice Questions - Common Admission Test Exam

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Choose the option that best summarises the paragraph: 'Behavioural economists have shown that human decisions deviate systematically from the rational-agent model assumed by classical theory. Loss aversion, anchoring, and present bias are not noise to be averaged away — they are robust regularities. Policy designed without these regularities tends to under-perform; policy that builds them in (default enrolments, salience cues) routinely outperforms standard incentives.'

Predictable cognitive biases should be designed into policy, since incentive-only approaches under-perform Classical economics has been entirely refuted by behavioural research Loss aversion is the most important behavioural bias for policy makers Default enrolments are the only proven behavioural policy tool

Correct Answer:

Predictable cognitive biases should be designed into policy, since incentive-only approaches under-perform

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