Sarah had invested most of her retirement savings in energy companies.However, when Enron declared bankruptcy, she transferred all her investments to government bonds because she decided that other energy companies were also likely to go bankrupt.In this example, Sarah's decision has most likely been influenced by the:
A)availability heuristic
B)representativeness heuristic
C)gambler's fallacy
D)underconfidence effect

Question

Quizplus · Accepted Answer

Sarah's decision is influenced by the availability heuristic, as she overestimates the likelihood of other energy companies going bankrupt based on the recent, vivid example of Enron's bankruptcy. This heuristic involves making decisions based on the information that is most readily available to us, often leading to a bias towards recent or highly memorable events.

Sarah Had Invested Most of Her Retirement Savings in Energy