Question

Escalation bias refers to the situation in which:_______. a. investors put more money into a failure rather than into a success. b. investors tend to follow the herd. c. investors have a propensity to sell winners too soon and hang on to losers too long. d. investors ignore bad news and overemphasize good news. e. investors are all noise traders.

Answer 1

Answer:

a. investors put more money into a failure rather than into a success.

Explanation:

The escalation bias is a part of behavioral finance. In this the investor is not accepting their mistake if they had done any kind of mistake. Rather accepting it they put more money in the asset that performed poorly also at the same time the bad news is ignored by them, they only focused to invest more and more in the stocks

hence, the correct option is a