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25 December, 18:09

Against his financial advisor's advice, Frank has decided to invest his money in some risky stocks because he once made

quite a bit of money in the stock market. His decision illustrates

A. the representativeness heuristic

B. overconfidence

C. the availability heuristic

D. confirmation bias

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Answers (1)
  1. 25 December, 20:41
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    A. the representativeness heuristic.

    Explanation:

    Representativeness heuristic refers to judgements made with a probability of an event, but under uncertainty. Meaning that judgments are made fast, it's like a shortcut, which has high probabilities to succeed or fail. So, in this example, Frank is taking decision with not much information, which allows him to act faster, but with a higher risk, based on one positive event.
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