Which of the following human emotions tend to affect investment decisions?
1)the pain of regret
2)following the crowd or "herding"
3)selective memory
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) all of these choices

Question

Quizplus · Accepted Answer

All three human emotions listed tend to affect investment decisions. The pain of regret can lead to avoidant behavior, such as not investing or selling investments too soon. Following the crowd or "herding" can lead to buying into overhyped investments or selling investments when everyone else is, regardless of the individual's personal financial situation. Selective memory can lead to only remembering the successful investments and ignoring the unsuccessful ones, which can lead to overconfidence and potentially repeating past mistakes.

Which of the Following Human Emotions Tend to Affect Investment