Eban believes that stock in RPS, Inc., currently selling at $15 per share, is undervalued. Eban has little experience buying stock but he strongly believes that he can outperform the overall market. The form of systematic bias exhibited by Eban is ____.
A) the sunk cost fallacy
B) time inconsistency
C) the framing effect, specifically mental accounting
D) overconfidence

Question

Quizplus · Accepted Answer

Eban's belief that he can outperform the overall market despite having little experience in buying stock demonstrates overconfidence. This is a common psychological bias where individuals overestimate their knowledge, ability, or access to information.

Eban Believes That Stock in RPS, Inc