The Loaned Car (Scenario)
Colleen is a student, and her older brother has loaned her an old car. The car is in need of several repairs before she will feel comfortable driving it.
-Colleen's brother feels that the car is worth repairing because he has owned several cars made by the same manufacturer,and he has driven this particular car for several years.He also points out that he has invested hundreds of dollars in maintenance and repairs over the years,so it is obviously worth investing in new repairs to keep it running.Colleen's brother appears to be basing his decision on ________ but may also be making an error known as ________.
A)intuition; confirmation bias
B)escalation of commitment; hindsight bias
C)framing bias; overconfidence bias
D)intuition; sunk costs error

Question

Quizplus · Accepted Answer

Colleen's brother is using his intuition to decide that the car is worth repairing, based on his past experience with cars from the same manufacturer. However, his decision may also be influenced by the sunk costs fallacy, where he feels that because he has already invested money in maintaining the car in the past, he needs to continue to invest money in it to justify his previous investment.