There are two grocery stores in the new locality that you have moved into. Since you did not know which store is better, you decided to go to the one which is relatively crowded. Your behavior is an example of ________.
22) Ron decided to sell a particular stock when he found out that many other people are selling it. This is an example of ________.
23) We often choose the school we attend on the basis of how popular it seems to be. Such behavior is an example of ________.
24) Voters are often influenced by opinion polls. They end up voting for the party that is likely to win according to the opinion poll. This occurs due to ________.
25) Hedge funds often buy the same stocks and track each other's investment strategies. This is an example of ________.
26) There are two equidistant exits in a movie hall. However, one exit is used by a majority of the people after the end of a movie. This is an example of ________.
27) ________ creates an informational equilibrium in which people trust the wisdom of others and ignore their own information.
28) During the global financial crisis of 2008, as more people started selling their houses in fear of falling house prices, the house prices fell further. This is an example of a(n) ________.
A) pecuniary externality
B) positive externality
C) information cascade
D) moral hazard
29) As more people in a country started hoarding grains in fear of a shortage, a shortage actually occurred. This is an example of a(n) ________.
A) positive externality
B) information cascade
C) moral hazard
D) adverse selection
30) Information cascade occurs when:
A) the buyer of a good has more information than the seller and takes hidden actions.
B) the seller of a good has more information about the hidden characteristics of the good.
C) people make the same decisions as others without focusing on private information.
D) people have contradictory information about a good they want to consume.
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