Al regularly pays the full amount of taxes due, even though he could easily hide some of his income and reduce his tax burden, with no risk of getting caught. According to behavioral economics,

A) Al is not economically rational in his behavior.
B) fairness and other moral considerations cause Al to act contrary to his pure self-interest.
C) Al is more ethical than the majority of the population.
D) heuristics are causing Al to act honorably, not a conscious or deliberative thought process.

Question

Hakilam Mckoy · Accepted Answer

Final Answer : B, Explanation :  Fairness and moral considerations can influence individuals to act in ways that might not align with maximizing their own financial self-interest, as seen in Al's decision to pay his full taxes despite having an opportunity to pay less without risk of detection. Behavioral economics recognizes that people's decisions are often influenced by factors beyond simple economic rationality, including ethics and fairness.

Definitions

Learning Objectives

Learning Objectives

Related questions