Eban Believes That Stock in RPS, Inc

question 33

Multiple Choice

Eban believes that stock in RPS, Inc., currently selling at $15 per share, is undervalued. Eban has little experience buying stock but he strongly believes that he can outperform the overall market. The form of systematic bias exhibited by Eban is ____.

• A) the sunk cost fallacy
• B) time inconsistency
• C) the framing effect, specifically mental accounting
• D) overconfidence

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Definitions:

Phi

Represents the Golden Ratio, approximately equal to 1.618, which is considered aesthetically pleasing in art and architecture; also a symbol used in psychology by Wolfgang Köhler for the phi phenomenon, an optical illusion of perceived motion.

Motion Parallax

A depth cue in which objects closer to the observer move faster across the visual field than objects farther away, giving a sense of depth and distance.

Figure Ambiguity

The quality of an image or representation that leads to multiple interpretations due to its unclear form.

Interposition

A visual cue in depth perception where one object partly covers another, indicating that the former is closer to the viewer than the latter.