If investors are too slow to update their beliefs about a share's future performance when new evidence arises they are exhibiting ________.
A)representativeness bias
B)framing error
C)conservatism
D)memory bias

Question

Quizplus · Accepted Answer

Conservatism bias refers to the tendency for investors to hold on to their original beliefs or assumptions even when presented with new evidence that contradicts those beliefs. This can result in a slower or lagging response to changes in a company's performance or market conditions. Representativeness bias refers to the tendency to make decisions or draw conclusions based on limited or incomplete information, while framing error occurs when the way information is presented or framed affects investor behavior. Memory bias refers to the distortion or selective recall of past events, which can also impact decision-making but is not directly related to updating beliefs in response to new evidence.

If Investors Are Too Slow to Update Their Beliefs About