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1) A) Vin Tanwar has just received new information regarding his investment in Orange, Inc
1) A) Vin Tanwar has just received new information regarding his investment in Orange, Inc. The new information appears to conflict with his earlier forecast of what the stock price should be at this point. Nonetheless, he is unwilling to incorporate the new information into his forecast and to revise it accordingly. What behavioral trait is Henry displaying?
a. Confirmation bias
b. Anchoring and adjustment
c. Conservatism bias
B. Which of the following errors would be due to information processing?
a. Status quo, endowmwnt, and regret-aversion biases
b. Anchoring and adjusment bias
c. Loss aversion, Overconfidence, and self-control biases
C. Kasai's investment history shows very few stocks sold at a loss. Kasai's investment history is most indicative of
a. overconfidence
b. fear of regret
c. anchoring-and-adjustment
Expert Solution
A.
Since he is unwilling to change his beliefs even when presented with new information, he is showing conservatism bias. The correct answer is c. Conservatism bias.
B.
b. Anchoring and adjusment bias is an example of information processing bias.
C.
He shows fear of regret as he doesn't seem to be selling his stocks as he fears he will regret the loss incurred.
b. fear of regret is the correct answer.
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