Lester Purchased a Stock Which Has Declined in Value by 25

question 62

Multiple Choice

Lester purchased a stock which has declined in value by 25 percent due to production flaws and obsolete product offerings. Lester continues to purchase shares as the stock price continues to decline. Lester is displaying the characteristic known as:

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

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Definitions:

Caudate Nucleus

A nucleus within the brain that plays significant roles in various cognitive, emotional, and motor functions.

Basal Ganglia

A group of structures located deep within the cerebral hemispheres of the brain, involved in a variety of processes including control of voluntary motor movements, procedural learning, habit learning, eye movements, cognition, and emotion.

Magical Thinking

The belief that one's thoughts, words, or actions can influence or bring about events in the physical world in an illogical or unrealistic way.

Repeating Behavior

The act of performing the same action or sequence of actions multiple times, often seen in various neuropsychiatric conditions.