Refer to the Scenario Below to Answer the Following Questions

question 71

Multiple Choice

Refer to the scenario below to answer the following questions.
The Loaned Car (Scenario)
Colleen is a student, and her older brother has loaned her an old car. The car is in need of several repairs before she will feel comfortable driving it.
-Colleen's brother feels that the car is worth repairing because he has owned several cars made by the same manufacturer, and he has driven this particular car for several years. He also points out that he has invested hundreds of dollars in maintenance and repairs over the years, so it is obviously worth investing in new repairs to keep it running. Colleen's brother appears to be basing his decision on __________ but may also be making an error known as __________.

• A) intuition; confirmation bias
• B) escalation of commitment; hindsight bias
• C) satisficing; hindsight bias
• D) framing bias; overconfidence bias
• E) intuition; sunk costs error

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Definitions:

Insurance Company

A business entity that provides financial protection or reimbursement against losses to individuals or entities, in exchange for the payment of premiums.

Merchants

Individuals or entities involved in the wholesale or retail purchase and sale of goods, often specialized in a particular trade or business.

Standardized Forms

Pre-designed documents with uniform format and content used across various transactions or processes for efficiency and consistency.

Materially Alter

In contract law, it refers to a change that significantly affects the rights or obligations of the parties involved.