Confirmation bias refers to the situation in which
A) investors have a propensity to sell winners too soon and hang on to losers too long.
B) investors ignore bad news and overemphasize good news.
C) investors tend to follow the herd.
D) investors put more money into a failure rather than into a success.
E) investors are all noise traders.

Question

Quizplus · Accepted Answer

Confirmation bias refers to the tendency to seek out and place more weight on information that confirms one's preexisting beliefs or hypotheses, while ignoring or downplaying information that contradicts them. In investing, this can manifest as investors disregarding negative news about a stock or company they like, while placing undue emphasis on positive news.

Confirmation Bias Refers to the Situation in Which