Which of the Following Cognitive Biases in Finance Suggests That

question 16

Multiple Choice

Which of the following cognitive biases in finance suggests that people tend to be overconfident in their predictions of the future

• A) Mental accounting
• B) Biased expectations
• C) Reference dependence
• D) Representativeness heuristic:

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Definitions:

Resource Reallocation

The process of redistributing resources from less productive to more productive uses to increase overall efficiency or to meet strategic objectives.

Society's View

The collective opinions, attitudes, and values of a community or population towards various issues, concepts, or entities.

Economic Function

The role or impact that an entity or process has within the economy, such as production, distribution, and consumption of goods and services.

Profits and Losses

The financial gain or loss that a business experiences, calculated as the difference between revenue and expenses.