When There Was a Rapid Increase in Valuation of Housing

question 5

Multiple Choice

When there was a rapid increase in valuation of housing, lenders and buyers strongly believed that prices would keep going up. The subsequent drop in housing values left both banks and borrowers with huge losses. This incident is a result of:

• A)representativeness heuristic.
• B)anchoring bias.
• C)availability bias.
• D)fundamental attribution error.
• E)over-confidence bias.

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Definitions:

Vision

the ability to see; the faculty of sight.

Color

The characteristic of visual perception described through hues, such as red, blue, and yellow, determined by the spectrum of light.

Lens

A transparent optical device used to converge or diverge transmitted light and to form images.

Focus

The concentration of attention or energy on a specific object, task, or goal, often essential for successfully completing tasks or resolving problems.