Each of the following situations illustrate a cognitive bias discussed in this course. What is the cognitive bias that is being illustrated in each example?

a) Last week, Microsoft's share price decreased by 0.5% on Monday, 1.2% on Tuesday, 0.1% on Wednesday, 0.8% on Thursday and 1.1% on Friday. As a result, on Monday morning, I sold all of my Microsoft shares.

b) I have seen Apple commercials while watching TV and browsing the internet repeatedly over the last few days. I decide to buy Apple shares.

c) Last week, Ford's share price decreased by 0.1% on Monday, 0.9% on Tuesday, 1.1% on Wednesday, 0.6% on Thursday and 1.3% on Friday. As a result, on Monday morning, I purchased shares of Ford stock.

d) Tesla's share price has increased roughly 300% over the last four months. The last time Tesla's share price increased that much over a few months, it quickly fell by 60%. As a result, I decide to sell my Tesla shares.

e) A year ago, I invested a small part of my savings into the shares of a small tech company. Since then, the company's share price increased by 100%. As a result, I've used the rest of my savings to buy more shares of this company.

Answer rating: 100% (QA)

solution a lossaversion bias lossaversion bias is a tendency to prefer to avoid loss to ... View the full answer