Tom knows that the title insurance company made a mistake on his property title. Because of their mistake, his neighbor now has access to an easement road through the 25 acres located at the back of his property. He can't use the acreage for pasture, because his neighbor insists that the gates remain open. The title company has offered a $40,000 settlement. Tom has decided to take the settlement rather than possibly lose in court if he were to sue the title company for more money. Tom's decision is based on ________.
A) hindsight bias
B) availability bias
C) risk aversion
D) randomness error
E) escalation of commitment

Question

Quizplus · Accepted Answer

Tom's decision to take the settlement rather than pursue litigation suggests that he is risk-averse, preferring to avoid the potential loss of a court case and accepting a guaranteed settlement instead.

Tom Knows That the Title Insurance Company Made a Mistake