GMAT Verbal Practice Questions - GMAT Focus Edition - Verbal Reasoning Exam

Passage: The rise of behavioral economics has fundamentally challenged the classical economic assumption that individuals act as perfectly rational agents who maximize utility. Researchers such as Kahneman and Tversky demonstrated through systematic experiments that human decision-making is riddled with cognitive biases — mental shortcuts that often lead to predictable errors. Loss aversion, for example, causes individuals to weight potential losses roughly twice as heavily as equivalent gains, leading to risk-averse choices that a purely rational actor would never make. Anchoring bias causes people to rely disproportionately on the first piece of information they encounter, even when that information is irrelevant to the decision at hand. The primary purpose of this passage is to: