LSAT 80, Logical Reasoning II, Q3, LSATHacks

LR Question 3 Explanation, by LSATHacks

QUESTION TEXT: Psychologist: In our study, participants who were…

QUESTION TYPE: Paradox

PARADOX: People would only pay $5 for a mug. But if they were given the same mug, they generally wanted more than $5 to sell it.

ANALYSIS: There seems to be a contradiction between people's willingness to buy and to sell. There's a psychological bias called loss aversion: we generally care more about losses than gains.

One of its effects is what we see in this paradox: people will sell things for more than they would have paid to buy them. This is often irrational, but it's a common human behavior. (It's not always irrational. For example, consider the time cost: it takes time both to buy and to sell a mug. So if you value your own time, you might reasonably pay less for a mug than you would sell it for.)

___________

1. This is nice, but the stimulus didn't mention any assessment of inherent value. So this doesn't explain anything.
2. In this case, the people were asked to sell the mug immediately after they got it. So they had no chance to “judge the value….possessed it…long period of time”.
3. The participants were given the mug. It doesn't sound like the mug was sold in the past.
4. CORRECT. This is a good description of loss aversion. If you don't own a mug, you won't pay much for it. If you do own a mug, then you'll need to be paid more money in order to sell it.
5. This makes the situation more confusing. People were overvaluing the mug they were given.

Recap: The question begins with “Psychologist: In our study, participants who were”. It is a Paradox question. To practice more Paradox questions, have a look at the LSAT Questions by Type page.

Hi, I'm Graeme Blake

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