The following statement is an example of investors being subject to confirmation bias:[Fill in the blank]

Question

BlackTom AI · Accepted Answer

Confirmation bias: people seek, interpret, and remember information that confirms their existing beliefs while downplaying or ignoring contradictory evidence. This leads investors to give greater weight to favorable news about stocks they already own and to dismiss signals that those positions are overvalued or excessively risky.

1) Relevant concepts
- Confirmation bias: selective attention to supporting evidence and neglect of disconfirming evidence.
- Diversification: spreading investments to reduce idiosyncratic risk; under-diversification increases exposure to stock-specific risk.
- Distinction from other biases: overoptimism and overprecision are forms of overconfidence but are not the same as confirmation bias.

2) Step-by-step reasoning
- Read each option and ask whether it describes behavior driven by selectively favoring confirming evidence.
- Option b states investors overweight information that supports their existing views on stocks they already hold and underweight or ignore evidence that those positions are too large or too risky. This directly describes selective acceptance of confirming information and ignoring disconfirming information — the core of confirmation bias — and explains the practical consequence (under-diversification).
- Option a ("Investors hold unrealistic beliefs about how high the returns...") describes overoptimism about returns, which is a different cognitive bias (optimism/overconfidence), not specifically selective evidence processing.
- Option c ("Investors hold unrealistic beliefs about how precisely they can predict future returns") describes overprecision, a subtype of overconfidence about forecast accuracy, not confirmation bias.
- Option d ("None of the options provided") is incorrect because option b matches confirmation bias.

3) No calculations required.

4) Why b is correct
Option b explicitly states the mechanism of confirmation bias (overweighting supporting information, underweighting/ignoring contrary evidence) and links it to a real portfolio consequence (under-diversification). That alignment of mechanism and outcome is precisely what confirmation bias predicts.

Conclusion: The correct choice is option b. This matches the provided answer: "b. Investors may under-diversify if they overweight information that supports their existing views on stocks they already hold and underweight or ignore evidence that those positions are too large or too risky."

The following statement is an example of investors being subject to confirmation bias:[Fill in the blank]单项选择题

类似问题

In behavioral finance, information processing errors include confirmation bias, which states that _____.

An interviewer reviews a résumé, decides the candidate is probably weak in leadership, and then pays disproportionate attention to answers that align with this belief. Which bias is this?

倾向于寻找和使用支持我们观点而非反驳我们观点的信息，这种倾向被称为

The tendency to search for and use information that supports our ideas rather than refutes them is known as

Is the following statement true or false? In the products of methylation-hydrolysis, every -OH group corresponds to the position of a glycosidic bond in the starting polysaccharide.

Which of the follwoing structures represents amylopectin?

Which of the following is true about an aldopentose?I. It is a monosaccharide.II. It contains a CHO groupIII. It is a disaccharide.IV. It is an oligosaccharide.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单