escalation bias

can someone just confirm what it is ? thanks :wink:

the correct answer to that question:)

when you buy stock, it drops in price, and you buy more, thinking that now it’s a bargain. it’s averaging down, as opposed to thinking you made a mistake purchasing in the first place and selling

What were the other choices? I vaguely remember that question.

willispierre Wrote: ------------------------------------------------------- > the correct answer to that question:) BEST answer thanks :wink: eric I don’t remember the other choices (btw r u French ??)

haha… i don’t remember it either but yes thats the correct ans :slight_smile:

escalation bias survivorship bias … not sure of the other 2

D’Artagnan Wrote: ------------------------------------------------------- > willispierre Wrote: > -------------------------------------------------- > ----- > > the correct answer to that question:) > > > BEST answer thanks :wink: > > eric I don’t remember the other choices (btw r u > French ??) No, I’m from California. What the hell? Where’d you get French from?

comfirmation bias

eric23 Wrote: ------------------------------------------------------- > D’Artagnan Wrote: > -------------------------------------------------- > ----- > > willispierre Wrote: > > > -------------------------------------------------- > > > ----- > > > the correct answer to that question:) > > > > > > BEST answer thanks :wink: > > > > eric I don’t remember the other choices (btw r > u > > French ??) > > > No, I’m from California. What the hell? Where’d > you get French from? hahahaahahahaahhahaahaha. ok sorry.

confirmation is when you ignore the market signs that tell you, that you made a bad decision Escalation is when you cough out more money into already bad position. I might be wrong but I marked escalation

Never heard of it, but I thought comfirmation bias described his action.

this was almost verbatim off of the mock i think

Agreed, completely off the mock. Escalation.

i am not discussing any question in specific… (to be on the safer side) but when you put in more money into a already unprofitable position it’s akin to averaging the purchase price down, a feature pertaining to escalation bias. Confirmation bias IMO deals solely with opinions and seeking out info to get them “confirmed” rather than see the info that contradicts.

> > > No, I’m from California. What the hell? Where’d > you get French from? it is a French rooted name, very commonly used here

i put confidence :confused:

This q was on one of the CFA mocks as well as the real test. Wouldn’t have gotten it if I didn’t take the mock.

overconfidence bias…

the way i remember it is if the position is going down you believe so much in it that you ‘escalate’ (raise) your position. so escalation bias