Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behavior does this BEST represent?

A) status quo bias
B) overconfidence
C) misperception of opportunity costs
D) risk aversion

Question

Arief Yudhistiro · Accepted Answer

Final Answer : B, Explanation :  Mary's decision to buy a new car based on the expectation of a future salary increase suggests overconfidence. She is assuming that her salary will actually increase, which may not be a reliable assumption. Additionally, even if her salary does increase, she may have other financial obligations or unexpected expenses that she has not considered. This decision is not necessarily based on a careful consideration of opportunity costs or risk aversion.

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behavior does this BEST represent?

A) status quo bias
B) overconfidence
C) misperception of opportunity costs
D) risk aversion

Definitions

Learning Objectives

Learning Objectives

Related questions

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behavior does this BEST represent?A) status quo biasB) overconfidenceC) misperception of opportunity costsD) risk aversion

Definitions

Learning Objectives

Learning Objectives

Related questions

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behavior does this BEST represent?

A) status quo bias
B) overconfidence
C) misperception of opportunity costs
D) risk aversion