When Enron failed, many Enron employees lost their retirements because they had invested their retirement funds in Enron stock. Which behavioral bias is most consistent with this observation?
A) House-money effect
B) Over-confidence
C) Loss aversion
D) Familiarity

Question

Quizplus · Accepted Answer

The familiarity bias occurs when investors prefer to invest in what they know, such as their own company's stock, leading to a lack of diversification and increased risk.

When Enron Failed, Many Enron Employees Lost Their Retirements Because