The tendency to sell winners and hold losers is known as the:
A) representativeness heuristic.
B) disposition effect.
C) house money effect.
D) self-attribution bias.
E) affect heuristic.

Question

Quizplus · Accepted Answer

The disposition effect refers to the tendency of investors to sell stocks that have increased in value and hold on to losing stocks. This behavior is often driven by the fear of realizing losses and the desire to lock in gains, even if it means missing out on further potential gains. The other options refer to different cognitive biases that can affect decision making in a variety of contexts, but are not specifically related to this particular behavior.

The Tendency to Sell Winners and Hold Losers Is Known