Research suggests that people who feel protected from a specific type of risk have a decreased tendency to act in...
GMAT Critical Reasoning : (CR) Questions
Research suggests that people who feel protected from a specific type of risk have a decreased tendency to act in a way calculated to avoid that risk. Therefore, to have a healthy economy, it seems prudent to have bankruptcy provisions that will adequately protect people against the financial catastrophe that can result from financial risk-taking.
Which of the following is an assumption on which the argument depends?
Passage Analysis:
| Text from Passage | Analysis |
| Research suggests that people who feel protected from a specific type of risk have a decreased tendency to act in a way calculated to avoid that risk. |
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| Therefore, to have a healthy economy, it seems prudent to have bankruptcy provisions that will adequately protect people against the financial catastrophe that can result from financial risk-taking. |
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Argument Flow:
The argument starts with a research finding about human psychology and risk, then applies this principle to economic policy. It moves from a general behavioral pattern to a specific recommendation about bankruptcy laws.
Main Conclusion:
To have a healthy economy, we should have bankruptcy provisions that adequately protect people against financial catastrophe from risk-taking.
Logical Structure:
The author uses the research finding as the foundation to support the policy recommendation. The logic is: if feeling protected makes people take more risks, then protecting people from financial catastrophe through bankruptcy laws will encourage more financial risk-taking, which will create a healthier economy.
Prethinking:
Question type:
Assumption - We need to find what the argument must assume to be true for the conclusion to logically follow from the premise
Precision of Claims
The argument makes a quality claim about what's 'prudent' for a healthy economy, connecting risk protection to economic behavior through bankruptcy provisions
Strategy
The argument jumps from 'people avoid risks less when protected' to 'bankruptcy protection helps the economy.' We need to identify the missing links that make this jump valid. We'll look for assumptions about:
- whether reduced risk avoidance in financial matters actually helps the economy
- whether bankruptcy protection actually makes people feel protected enough to change behavior
- whether the research finding applies to financial risk-taking specifically
This choice states that financial risk-taking is good for the economy. This is exactly what the argument MUST assume to work! The logic is: bankruptcy protection → people feel safer → people take more financial risks → healthy economy. But wait - that final step only works if financial risk-taking actually helps the economy. If risk-taking hurt the economy, then the whole policy recommendation would backfire. This assumption is absolutely essential for the argument's conclusion to make sense.
This talks about tax money and people using money unwisely, but our argument is specifically about bankruptcy provisions, not tax-funded protection. The argument doesn't depend on whether the protection comes from taxes or how it might influence 'unwise' spending. This misses the core logical gap in the original argument.
This suggests some people won't take risks even with bankruptcy protection. Actually, the argument doesn't need ALL people to change their behavior - it just needs the general principle (that protection reduces risk avoidance) to apply enough to help the economy. If anything, this choice works against the argument's logic rather than supporting it as an assumption.
This addresses blame and unforeseen disasters, but the argument isn't making any moral judgments about who deserves protection. The argument is purely about economic policy effectiveness based on behavioral research. The issue of blame is completely irrelevant to whether bankruptcy protection helps create a healthy economy.
This tries to limit bankruptcy protection only to business ventures, but the argument doesn't make any distinction between types of financial risks. The research principle and conclusion are about financial risk-taking in general. The argument doesn't depend on restricting protection to only certain categories of risk.