Amy has been investing in stocks so she can accumulate sufficient money to purchase her own home.These savings are currently valued at $82,500.As recently as last month,her savings were worth in excess of $110,000.Today,Amy found the perfect house.She knows she can withdraw her savings to pay on this house and borrow the remaining balance from her father at zero percent interest.However,Amy is refusing now to buy any house until her savings increase in value back to their $110,000 previous valuation.Amy is displaying which one of the following behaviors?

Question

Quizplus · Accepted Answer

Amy is exhibiting loss aversion by refusing to buy a house until her savings increase in value back to their previous valuation. She is more concerned with the loss of her previous savings rather than the potential gain of owning her own house.

Amy Has Been Investing in Stocks So She Can Accumulate