Question

According to the passage, which of the following behaviours of people are better explained by behavioural science than by economics?

• A. Selling an asset at a price lower than its purchase price.
• B. Taking a job that pays 70000 dollars a year today than working to build skills that may get them a 100000 dollar a year job after two years.
• C. Selling a 200 dollar flight ticket at 205 dollars.
• D. Options A and B

Answer 1

The correct option is D

Options A and B

In the first paragraph, the author mentions that the findings of behaviour science suggest that people 'devalue long term returns as compared to short term gains'. We also find an explanation of why 'people buy high and sell low'. The endowment effect is just the opposite of what is suggested by Option C. Economics and not behaviour science will say that people will sell their $200ticketfor$ 205.