Prospect theory provides an explanation for why individuals tend to

A) hold on to their investments for too long
B) sell their investments too quickly
C) sell their investments under value
D) none of these choices

Question

Prospect theory provides an explanation for why individuals tend to

A) hold on to their investments for too long
B) sell their investments too quickly
C) sell their investments under value
D) none of these choices

Quizplus · Accepted Answer

These loss-averse investors prefer to hold a risky,loss-making asset where they believe that there is a chance of recovering the loss in the future,rather than selling the asset immediately and cutting their losses.This helps to understand why individuals might hold poor investments for too long.Prospect theory provides an explanation for why individuals tend to sell their investments too quickly.

Prospect Theory Provides an Explanation for Why Individuals Tend to