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 his back 25 acres. 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 ________.

Question

Quizplus · Accepted Answer

Tom's decision to take the settlement rather than risk going to court indicates his preference for risk aversion. He would rather have a guaranteed amount of money than potentially lose in court and receive nothing. Hindsight bias, availability bias, randomness error, and escalation of commitment do not apply in this scenario.

Tom Knows That the Title Insurance Company Made a Mistake