Amy is the chief financial officer of a retail toy store. Recently, she decided that the firm should expand its operations and open two additional stores. Within a very brief period, it was obvious that Amy had made a very bad decision in opening those stores, given that the economy is in the middle of a severe recession. In reflecting back on her decision, Amy realizes that she made a bad decision due to a reasoning error. Which one of the following areas of study best applies to this situation?

Question

Quizplus · Accepted Answer

Amy's situation involves a decision-making process influenced by psychological factors under economic conditions, which is a primary focus of behavioral finance. This field studies how psychological influences and biases affect the financial behaviors of individuals and institutions, including errors in judgment under uncertainty, like the one Amy made.

Amy Is the Chief Financial Officer of a Retail Toy