Eli purchased stock in XYC, Inc. at $31 a share, but the stock is now worth only $19 a share. Eli believes that XYC's stock will underperform the average stock market return going forward. However, Eli won't sell his stock until it reaches at least $31. Eli's decision making is:

Question

Quizplus · Accepted Answer

Eli's decision is biased by sunk costs because he is considering the price he paid for the stock ($31) rather than making a decision based on the current value and future prospects of the stock. This is a common cognitive bias where individuals allow their past investment decisions to influence their current decision-making, even when those past investments should no longer be relevant to the decision at hand.

Eli Purchased Stock in XYC, Inc