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Difficulty: MediumValidating Sentence Coherence and Pair Equivalence

Although early economic models assumed that human decision-making in financial markets was guided strictly by rational self-interest, recent empirical studies demonstrate that cognitive biases frequently __________ market outcomes, leading to systematic deviations from theoretical equilibrium. Select the two answer choices that, when inserted into the sentence, produce completed sentences that are similar in meaning.

  1. distortAnswer
  2. skewAnswer
  3. C
    exacerbate
  4. D
    precipitate
  5. E
    mitigate
  6. F
    alleviate

Answer

The correct selections are 'distort' and 'skew'. Both words successfully complete the sentence to convey that cognitive biases alter or bias market outcomes away from rational equilibrium, creating two sentences that are identical in meaning.
The sentence setup contrasts ideal rational decision-making with the reality of cognitive biases causing deviations. The words 'distort' and 'skew' both accurately describe the action of twisting or slanting market outcomes away from equilibrium, producing two completed sentences that are logically sound and identical in meaning.

Step-by-Step Solution

1
Analyze structural signals and contextual polarity in the sentence stem.
The opening concession marker 'Although' establishes a contrast between the assumption of 'rational self-interest' and the reality that cognitive biases cause 'systematic deviations from theoretical equilibrium'.
Identifying the contrast signal clarifies that the missing word must describe an action where cognitive biases warp, alter, or misalign market outcomes.
2
Evaluate answer choices for contextual fit and semantic equivalence pairs.
The words 'distort' and 'skew' both mean to bias or warp away from true equilibrium, making them precise contextual fits and true synonyms in this frame.
Sentence Equivalence questions require selecting two options that independently complete the sentence while producing identical overall meanings.
3
Eliminate false distractors and non-equivalent single choices.
'Exacerbate' and 'precipitate' fit context loosely but have no equivalent synonym partner. 'Mitigate' and 'alleviate' form a synonym pair but contradict sentence logic.
Distractor options either fail pair equivalence validation or violate sentence coherence.

Key Concept

Validating Sentence Coherence and Pair Equivalence
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Topics

Validating Sentence Coherence and Pair Equivalence

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