When Confronted with "H H H H T T T

question 19

Multiple Choice

When confronted with "H H H H T T T T T T" as a summary of the results of a series of 10 flips of a coin,most people will view that series as "less random" than a summary of results that looks like "H H T H T T H T H T," even though the odds of a "head" on the next toss is 50/50 in each case.Why? Their estimates have been biased by

• A) counterfactual thinking.
• B) the availability heuristic.
• C) the representativeness heuristic.
• D) downward counterfactual thinking.
• E) anchoring and insufficient adjustment.

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Definitions:

Straight-Line Depreciation

This method of depreciation spreads the cost evenly across the useful life of a fixed asset, resulting in consistent annual charges.

Variable Cost

Financial charges that are tied to the extent of production levels.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Upper Bound

The highest value that a mathematical function, statistical operation, or range of variables can reach under specific conditions.