GROWTH DEVELOPMENT CHILD
COGNITION AND EMOTIONS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It explains away failures, confirms beliefs, and uses intuitive heuristics instead of algorithms
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It explains away lack of motivation, causes overuse of algorithms and doesn’t take beliefs into account
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Either A or B
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None of the above
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Detailed explanation-1: -The danger of an overconfidence bias is that it makes one prone to making mistakes in investing. Overconfidence tends to make us less than appropriately cautious in our investment decisions. Many of these mistakes stem from an illusion of knowledge and/or an illusion of control.
Detailed explanation-2: -Overconfidence bias occurs when a decision-maker overestimates the reliability of their own judgments. This can include the certainty they feel about their own ability, performance, level of control, or chance of success.
Detailed explanation-3: -In investing, overconfidence bias often leads people to overestimate their understanding of financial markets or specific investments and disregard data and expert advice. This often results in ill-advised attempts to time the market or build concentrations in risky investments they consider a sure thing.
Detailed explanation-4: -A person who thinks their sense of direction is much better than it actually is could show overconfidence by going on a long trip without a map and refusing to ask for directions if they get lost along the way. An individual who thinks they are much smarter than they actually are is a person who is overconfident.