Yesterday, Krista Stated That Overland Stock Was Only Worth $12

question 51

Multiple Choice

Yesterday, Krista stated that Overland stock was only worth $12 a share and since it was selling for $15 a share, she declared it overpriced and refused to buy any shares. This morning, she learned that she is inheriting 3,500 shares of Overland stock from her grandmother. Suddenly, she is saying that Overland stock is a great buy at $15 and is probably worth at least $17 a share. This is an example of which one of the following?

• A)endowment effect
• B)money illusion
• C)regret aversion
• D)myopic loss aversion
• E)sunk cost fallacy

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Definitions:

Affective Forecasting

The process of predicting one's future emotional states or the emotional impact of future events.

Problem-solving Ability

The capacity to process information, analyze complicated situations, and come up with effective solutions.

Affect-as-information Hypothesis

The theory suggesting that individuals use their current emotions to infer attitudes and preferences under certain conditions.

Anticipated Emotions

The emotions people expect to feel due to future events or outcomes.