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.