Bill and Shelly are friends.Bill invests in a portfolio of hot stocks that almost all his friends are invested in.Shelly invests in a portfolio that is totally different from all her friends.Both Bill and Shelly's stocks fall 15%.According to regret theory _________________________________________.
A) Bill will have more regret over the loss than Shelly
B) Shelly will have more regret over the loss than Bill
C) Bill and Shelly will have equal regret over their losses
D) Bill and Shelly's risk aversion will increase in the future

Question

Quizplus · Accepted Answer

According to regret theory, individuals feel more regret when their decisions deviate from the norm or the decisions of others. Since Shelly's portfolio is different from her friends', she is likely to feel more regret over the loss compared to Bill, who invested similarly to his friends.

Bill and Shelly Are Friends