Spoiler: CFAI 2007 Q3

I think the behavioral question is kind of nonsense: Q3: === After constructing a model of factors affecting the market, Nultione becomes convinced that U.S market returns will be 13.47% for the first half of this year followed by an 11.21% return for the second half of this year. Ans: === Trap: Overcofidence Justification: Extreme confidence in his models. Do you guy think this is total nonsense ?

I missed that. After seeing that they were after over-confidence, initially I was bitter, then after thinking about it, I thought it made sense. The only indication I could come up with at first for over-confidence was that he is “convinced.” After thinking about it for a few minutes I figured that since he had no confidence intervals around his projections, that was an indication that he was over-confident in his model’s prediction powers. Edit: on a side note, I felt the justification given was a restatement of the trap. On test day I am going to have a hard time saying “trap: this is over-confidence. justification: uh ummm, because he has extreme confidence?”

As slouicar has noted, the keyword in this that gives it away is “convinced” and there are specific targets and the confidence band is zilch, or he thinks he is going to be spot on. While I got this one right, I got the recallability trap incorrect. I couldn’t remember that one so I just put down “representativeness”.

Can someone tell me why this couldn’t be “Fear of Regret”?? He says that “he does not want to miss another market low”. ??

ok so i think i can answer my own question, since fear of regret is not a psychological trap. now, though, for hyatt, since he initially believed that the recent downward trend would continue, and he later went to a conference and agreed with an analyst, wouldn’t this also be considered “confirming evidence”?