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What Are Some Common Errors Investors Make in Assessing the Probability

question 59

Essay

What are some common errors investors make in assessing the probability of uncertain outcomes? How did such errors reinforce the dot.com boom?


Definitions:

External Locus of Control

A belief that outcomes in one's life are controlled by external forces or fate, rather than one's own efforts or actions.

Implicit Motivation

The unconscious drive that influences behaviors and decision-making, often without the individual's aware intent.

Explicit Motivation

A type of motivation that stems from conscious goals, desires, or needs of an individual.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, emphasizing the idea that behavior is influenced by its consequences.

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