Asked by Ahmed Nasser on May 23, 2024
Verified
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.
Confirmation Bias
The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.
Behavioral Economists
Researchers focusing on the impact that psychological, cognitive, emotional, cultural, and social elements have on the economic decisions of individuals and organizations.
Investment Portfolio
A collection of various types of investments held by an individual, institution, or financial entity designed to achieve specific financial goals.
- Understand the consequences of confirmation bias in validating pre-existing beliefs and information.
Verified Answer
Learning Objectives
- Understand the consequences of confirmation bias in validating pre-existing beliefs and information.
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