The phenomenon in which individuals believe others have superior information which they can take advantage of by copying their trades is referred to as ________.

Question

Quizplus · Accepted Answer

The cascade effect refers to the phenomenon in which individuals believe others have superior information which they can take advantage of by copying their trades. This often leads to a chain reaction of individuals following the actions of others without making independent decisions. A and D are unrelated terms, while the disposition effect refers to the tendency of investors to hold onto losing investments for too long and sell winning investments too soon.

The Phenomenon in Which Individuals Believe Others Have Superior Information