Rohit Had the Opportunity to Choose Between Two Investments

question 25

Multiple Choice

Rohit had the opportunity to choose between two investments. The first investment was described as having a 30% chance of succeeding, while the second investment was described as having a 70% chance of failing. Rohit opted for the first investment because he thought it sounded less risky than the second investment. The chances of succeeding and failing are the same for the two investments, however, which implies that Rohit is subject to

• A) a framing bias.
• B) overvaluing the present relative to the future.
• C) overconfidence.
• D) a sunk cost fallacy.

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Definitions:

Subtype

A distinct group within a broader category that differs in some characteristics from the main group.

Superordinate Category

A higher-level classification that groups together more specific or subordinate categories based on common characteristics.

Corporate Executive

A senior manager or an administrative leader in a corporation who has significant decision-making powers and responsibilities for the organization's direction.

Socially Salient Stimulus

A stimulus that stands out or is particularly noticeable in a social context, often because it is relevant or significant to social interactions.