Because of a boom in technology stocks in the late 1990s, even novice investors experience huge growth in their portfolios. As technology stocks kept going up, many investors believe that their successes was due to their stock-picking ability rather than unsustainable growth in one sector of the economy. The result for many was huge losses. This scenario illustrates the concept of
A)availability bias.
B)representativeness bias.
C)anchoring-and-adjustment bias.
D)confirmation bias.
E)overconfidence bias.

Question

Quizplus · Accepted Answer

The scenario describes investors experiencing huge growth in their portfolios due to the boom in technology stocks. Because of this success, many investors believed they had a special ability to pick winning stocks, leading to overconfidence bias. This ultimately resulted in huge losses when the bubble burst, as they didn't correctly assess the unsustainable growth of the technology sector.

Because of a Boom in Technology Stocks in the Late