Which of the following indicates a strong mental attachment

Which of the following indicates “a strong mental attachment to particular price”?

Heuristic

Choice overload

Anchoring

Herding

Which of the following is the most likely reaction of investors according to prospect theory?

When they gain $2,000, they feel more than twice as happy as when they gain $1,000.

When they lose $2,000, they feel as twice bad as when they lose $1,000.

When they lose $1,000, the magnitude of their disappointment is larger than the magnitude of their happiness from a $1,000 gain.

Investors tend to sell losing portfolios as quickly as possible.

Heuristic

Choice overload

Anchoring

Herding

Which of the following is the most likely reaction of investors according to prospect theory?

	A.	When they gain $2,000, they feel more than twice as happy as when they gain $1,000.
	B.	When they lose $2,000, they feel as twice bad as when they lose $1,000.
	C.	When they lose $1,000, the magnitude of their disappointment is larger than the magnitude of their happiness from a $1,000 gain.
	D.	Investors tend to sell losing portfolios as quickly as possible.

Ans

1 Anchoring. Here some price acts as an anchor on the basis of which decision is made

2 c is right. Here losing provides more disutility than gaining same amount