Steve Purchased a Stock Last Year for $34 a Share

question 47

Multiple Choice

Steve purchased a stock last year for $34 a share. The stock increased in value to $36 a share before declining to its current value of $30. Steve has decided to sell the stock, but only if he can receive $34 a share or better. Steve is suffering most from which one of the following behavioral conditions?

• A) Representativeness heuristic.
• B) House money.
• C) False fallacy.
• D) Randomness.
• E) Arbitrage reaction.

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Definitions:

Predisposition

Instances where learning occurs more rapidly or in a different form than expected.

Rapidly

Occurring within a short time or at a fast pace.

Environmental

Pertaining to the natural and physical surroundings in which an organism lives, and how these surroundings affect behavior and development.

Behavior Systems Approach

The idea that learning evolved as a modifier of innate behavior systems and functions to change the integration, tuning, instigation, or linkages within a particular system.