The fact that the money managers that earned the best returns last year tend to attract more money this year than the average money manager is an example of:

Question

Quizplus · Accepted Answer

The clustering illusion refers to the tendency to see patterns in random events. In this context, investors might mistakenly believe that past performance (a pattern of good returns) will continue, leading them to invest more money with those managers, despite the randomness of investment returns.

The Fact That the Money Managers That Earned the Best