Question 1 Essay had Maclin saying: “I do not want to sell any bond in my portfolio for a lower price than I paid for the bond” This looks like straightforward “loss aversion” to me. Wonder why that is not mentioned in the “Guideline Answer”? J
talked about earlier today - loss aversion, fear of regret… and i belive depending on the situation you could make a case for anchoring but that would be a weaker answer than the other two behavioural bias.
Yeah, I agree… loss aversion and fear of regret stronger than anchoring. The “Guideline Answer” only mentions “Reference Point” which is what surprised me. Thanks again for your replies. J
well, remember you are studying from PAST exams. the material, definitions, and LOS do change…
Its Loss Aversion for sure, not regret either. Regret is not only the fear of loss but the fear that you caused the loss also it is typically associated with not wanted to sell a security in fear that it’s price will rise dramatically soon after selling it. Loss Aversion is not wanting to sell a stock for less than cost b/c its a “paper-loss”/ “get evenitis”