If investors overweight recent performance in forecasting the future, they are exhibiting ________.
A) representativeness bias
B) framing error
C) memory bias
D) overconfidence

Question

Quizplus · Accepted Answer

Representativeness bias refers to the tendency to base judgments or make decisions based on the degree to which an event or situation appears to be similar to typical examples. In this case, investors are overweighting recent performance, which is a typical example of representativeness bias. Framing error refers to the way in which information is presented or framed, which can influence decision-making. Memory bias refers to the way in which past experiences or information can influence current decision-making. Overconfidence refers to the tendency to overestimate one's abilities or knowledge, which is not directly related to the scenario described in the question.

If Investors Overweight Recent Performance in Forecasting the Future, They