A friend of yours recommends a stock based upon a "hot tip." You purchase it, and it subsequently declines the following year. Your friend advises you to purchase more at the lower price, despite clear evidence that this is not a sound company. Which of the following cognitive biases is being displayed by your friend?
A) projection
B) cognitive dissonance
C) escalation of commitment
D) frequency

Question

Quizplus · Accepted Answer

Your friend is displaying the cognitive bias of escalation of commitment, which is the tendency to continue investing in a failing decision or action despite negative feedback or evidence. They are doubling down on their initial bad decision instead of accepting their losses and moving on.

A Friend of Yours Recommends a Stock Based Upon a "Hot