Dorothy likes to invest in gold as part of her overall financial investment portfolio, as her gut tells her it will increase dramatically in value. Her favorite and generally only source of investment advice is Wizard's Gold Hour on the OZ cable
channel. As a result of this advice, Dorothy's portfolio mix is suboptimal, as it is too heavily weighted in gold. Behavioral economists would say that Dorothy suffers from:
A. framing effects.
B. confirmation bias.
C. self-serving bias.
D. planning fallacy.
Answer: B
You might also like to view...
Mercantilism is another name given to the version of capitalism that has emerged in the globalized world of the 21st century
Indicate whether the statement is true or false
Investment decisions are based on the trade-off between the:
A. potential profit that could be generated by investment and the cost of borrowing money to finance the investment. B. interest rate that savers will earn and the interest rate that the borrowers will have to pay. C. future value of the loan and the present value of the loan. D. potential profit that could be generated and the willingness of a lender to make the loan.