An example of ________ is that it is not as painful to have purchased a blue-chip stock that decreases in value as it is to lose money on an unknown start-up firm.
A) mental accounting
B) regret avoidance
C) overconfidence
D) conservatism

Question

Quizplus · Accepted Answer

Regret avoidance refers to the tendency of individuals to make decisions in a way that allows them to avoid feeling regret in the future. In this example, the idea is that investing in a blue-chip stock feels less regrettable if it loses value compared to investing in a riskier, unknown start-up, because the blue-chip investment is perceived as a safer, more justifiable decision even if it results in a loss.

An Example of ________ Is That It Is Not as Painful