A Manager Decided to Continue to Purchase Insurance from a Company

question 72

Multiple Choice

A manager decided to continue to purchase insurance from a company that charged high premiums,even though the manager knew that he or she could get the same coverage for less.This is an example of what type of cognitive bias?

• A)Systematic errors
• B)Representative bias
• C)Escalating commitment
• D)Illusion of control and overconfidence bias
• E)Prior hypothesis bias

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Definitions:

Condition Precedent

A legal term for a condition that must be fulfilled before a party is required to perform a contractual obligation.

Perform

To carry out a task or to execute an action, especially in accordance with requirements or expectations.

Contract Formation

The process by which parties reach a mutual understanding and agreement that is legally enforceable.

Frustration

A feeling of being upset or annoyed, especially because of inability to change or achieve something, or in legal terms, the prevention of fulfilling a contract due to unforeseen events.