When Decision Makers Seek Out Information That Reaffirms Their Past

question 19

Multiple Choice

When decision makers seek out information that reaffirms their past choices and discount information that contradicts past judgments, they are exhibiting the ________.

• A) framing bias
• B) availability bias
• C) representation bias
• D) confirmation bias

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Definitions:

Short and Long Run

Terms used in economics to distinguish between time periods; the short run considers some factors as fixed, while in the long run, all factors of production are variable.

Loan Covenant Violations

Occur when a borrower fails to meet one or more conditions of the loan agreement, potentially leading to penalties or the loan being called due.

Accounting Changes

Amendments in accounting principles, estimates, or the reporting entity that affect the financial statements of a company.

Reported Earnings

Reported earnings refer to the net income of a company as stated in its income statement, in compliance with the relevant accounting standards.