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

Behavioral finance is the study of how human behavior and emotions can impact financial decision-making. In this scenario, Amy made a decision to expand during a recession, which may have been influenced by overconfidence, optimism bias, or other behavioral factors that led her to underestimate the risks involved. Thus, Amy's situation best applies to the field of behavioral finance.

Amy Is the Chief ﬁNancial Oﬃcer of a Retail Toy