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 purchases more at the lower price, despite clear evidence that this is not a sound company. Your friend is displaying which cognitive bias?
A) escalation of commitment
B) cognitive dissonance
C) frequency
D) projection

Question

Quizplus · Accepted Answer

This situation is an example of escalation of commitment, where the friend persists in their recommendation despite evidence of decline and poor performance of the stock.

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