One of the Core Problems That Created the Financial Meltdown

question 73

Multiple Choice

One of the core problems that created the financial meltdown of 2008 was that large loans were made to individuals who could not repay them, and the finance companies purchased these bad debts without realizing how poor the prospects of repayment were. Which of the following decision-making errors was made by the lenders and borrowers?

• A) hindsight bias
• B) availability bias
• C) overconfidence bias
• D) confirmation bias
• E) anchoring bias