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:

DSM-5

The 5th edition of the Diagnostic and Statistical Manual of Mental Disorders, a standardized classification system for diagnosing mental disorders used by mental health professionals in the U.S.

Histrionic

Relates to a pattern of excessive emotionality and attention-seeking behavior; often associated with Histrionic Personality Disorder.

DSM-IV-TR

The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision; a manual used to diagnose mental disorders.

Cluster A

Refers to one of three clusters of personality disorders in the DSM, characterized by odd or eccentric behaviors, including paranoid, schizoid, and schizotypal personality disorders.