Behavioral economists have documented numerous ways consumers deviate from rational decision-making: we overvalue present rewards, fail to calculate properly, and are influenced by irrelevant factors. Some argue these findings show markets need more regulation to protect consumers from their own irrationality. Others counter that regulators are equally human and susceptible to the same biases, potentially making regulatory 'corrections' no better or even worse.
Based on the passage, it can be inferred that
applying findings about human irrationality to policy involves additional considerations beyond the findings themselves
all consumer decisions are perfectly rational
regulators are immune to cognitive biases
behavioral economics research has no policy implications
Correct Answer: A
Choice A is the best answer. Moving from findings to policy raises questions about who implements policy.
- Context clues: Consumer irrationality is documented; but regulators are "equally human" with same biases.
- Meaning: Policy implications depend not just on findings but on who makes corrections.
- Verify: The counterargument shows that applying research involves additional complexity.
💡 Strategy: When objections to a policy application arise, infer that moving from research to policy involves extra considerations.
Choice B is incorrect because numerous deviations from rationality are documented. Choice C is incorrect because regulators are "equally human and susceptible to the same biases." Choice D is incorrect because both sides derive policy implications, just different ones.