Chapter 2: Financial Attitudes and Behaviors Quiz

Which cognitive bias refers to the tendency to avoid losses rather than acquiring equivalent gains?

What is an example of the Endowment Effect?

Which strategy helps mitigate the impact of cognitive biases in investment decisions?

Societal norms have no impact on individual financial decision-making.

Mental accounting refers to treating money differently based on its source or intended use.

Definition

Definition

Arrange these steps in the correct order to mitigate cognitive biases: Recognize the bias, Seek objective advice, Diversify investments, Set up automatic rebalancing. (put the first step at the top)

Rank the following influences from most impactful to least impactful on financial behaviors: Personal Values, Societal Norms, Cognitive Biases, External Influences. (put the most impactful at the top)

How can recognizing and understanding cognitive biases improve your financial decision-making?

Describe a personal or societal value that has influenced your financial decisions and provide an example of its impact.