2007 paper on Behavioral finance

Question 3, 2007 paper. According to the answer, Hyatt has Status Quo trap. But why? Answer says “he is convinced that the current weak performance of the US market will continue”. But I can’t really tell this from the question. What do you think? - sticky

I am not looking at the question…however, if I see that statement in isolation, I will write overconfidence, since he is “convinced”.

From the question : By contrast, Hyatt believes the recent downward trend in the market will continue, and any gains from restructuring EA’s portfolio allocation would not be worth the risk of relative underperformance. From the Answer : Hyatt has fallen into the status quo trap in that he is convinced that the current weak performance of the U.S. market will continue. A trend itself is not sufficient evidence to predict that it will continue. Acting to change the status quo may lead to regret if the decision is wrong, as is evidenced by Hyatt’s concern about the performance impact if Nultione is wrong.

thanks, CareerChange! More question … In the answer, Hyatt’s anchoring trap is evidenced by “… Nultione has only recently been hired by EA”. I agree about anchoring trap but I don’t understand why this last point is a reason. Any light on this? - sticky

Sticky, perhaps to point out that Nulitone is new kid on the block and Hyatt is anchored to the older Mr. Singh.