Sometimes We Will Do Something We Normally Wouldn't Choose to Do

question 150

Multiple Choice

Sometimes we will do something we normally wouldn't choose to do, but we do so because of the money or effort which we have already spent. This is termed the

• A) sunk cost effect.
• B) availability heuristic.
• C) fundamental attribution error.
• D) actor-observer bias.

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Definitions:

Junk Bond

A high-yield bond with a lower credit rating, reflecting a higher risk of default but offering potentially greater returns.

High-Risk Bond

A bond with a lower credit rating, indicating a higher risk of default, but offering higher potential returns to compensate for this risk.

High Yields

Bonds that offer higher interest rates because they have lower credit ratings, implying greater risk of default.

Oligopolies

Markets dominated by a small number of large firms, leading to limited competition.