Escalation bias refers to the situation where
A) Investors have a propensity to sell winners too soon and hang on to losers too long.
B) Investors ignore bad news and overemphasize good news.
C) Investors tend to follow the herd.
D) Investors put more money into a failure rather than into a success.
E) Investors are all noise traders.

Question

Quizplus · Accepted Answer

Escalation bias occurs when investors continue to invest in a failing project or decision, often due to emotional attachment or the desire to avoid admitting a mistake, rather than reallocating resources to more successful ventures.

Escalation Bias Refers to the Situation Where