Regret Aversion and Anchoring

CFA Level III
#1

2014 AM

Would a prior investment decision that resulted in a loss stop you from making a similar decision, even if the new investment appears to be the best alternative?

Regret Aversion…but HOW?? This sounds like availability to me…

Would you sell a recent equity investment following a management announcement of earnings growth decline?

Anchoring…but HOW?? This sounds like loss aversion to me…

#2

  1. Regret is stopping you from making a similar decision. Availablity bias has nothing to do with this question.

  2. The question tests to see if you will change your position based on new information. This is testing for anchoring bias.