QUESTION 1 Which of the following is not a behaviour bias? a. Prospect theory b. Conservatism C. Framing d. Mental accounting Regret avoidance e.
Analysis of the given options:
a) Prospect theory
ANALYSIS- Prospect theory finds application in behavioral finance, and it is based on the assumption that an individual perceives gains and losses differently. An investor chose perceived gains as loss causes a greater emotional impact.
REMARK-This theory includes behavioral bias.
b) Conservatism
ANALYSIS-It refers to the commitment to uphold traditional values and opposes innovation in all spheres.
REMARK-Conservatism includes behavioral bias.
c) Framing
ANALYSIS-It is an integral part conveying and processing data on a regular basis and framing technique stimulates the decision making process by prioritizing particular aspects by eliminating the others as per the requirement of the situation.
REMARK- Framing do not include behavioral bias.
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