Carl Owns Stock in XYZ, Which Has Dropped by 20

question 19

Multiple Choice

Carl owns stock in XYZ, which has dropped by 20% over the last month. Carl decides to purchase additional shares of XYZ. Which bias is most consistent with Carl's decision?

• A) Representativeness
• B) Overconfidence
• C) Naïve diversification
• D) Status quo bias

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Definitions:

Rationalization

The process of making activities or tasks more efficient and logical, often through the implementation of rules and procedures.

Max Weber

A German sociologist, philosopher, and political economist who is regarded as one of the founders of the modern study of sociology and public administration.

Sanctions

Measures of reward or punishment that regulate individual or group behavior within societies or organizations.

Subculture

A subgroup within a broader culture that typically holds different beliefs or interests from the main cultural body.