Bill and Shelly are friends. Bill invests in a portfolio of hot stocks that almost all his friends are invested in. Shelly invests in a portfolio that is totally different from the portfolios of all her friends. Both Bill's and Shelly's stocks fall 15%. According to regret theory, ________.
A) Bill will have more regret over the loss than Shelly
B) Shelly will have more regret over the loss than Bill
C) Bill and Shelly will have equal regret over their losses
D) Bill's and Shelly's risk aversion will increase in the future

Question

Quizplus · Accepted Answer

Shelly is likely to experience more regret than Bill because she made a unique decision that went against the choices of her peers, leading to a sense of individual responsibility for the loss.

Bill and Shelly Are Friends