After buying stock ABC, you actively search for favourable news and analysis on ABC to support your investment thesis while ignoring any unfavourable coverage. What kind of bias is this?

Question

BlackTom AI · Accepted Answer

When evaluating the scenario, consider what each bias implies about information processing.
Option a: Anchoring bias refers to the tendency to rely too heavily on the first piece of information (the 'anchor') when making decisions. In this case, the description focuses on seeking favorable news and ignoring unfavorable coverage, which is more about selective information processing than fixating on an initial numeric or contextual anchor.
Option b: Availability bias involves judging the likelihood of events based on how easily examples come to mind, often amplified by recent or vivid information. The scenario emphasizes selective search for favorable coverage rather than the ease with which examples of favorable coverage come to mind, so availability bias isn’t the best fit.
Option c: Confirmation bias is the tendency to search for, interpret, and remember information in a way that confirms preexisting beliefs or hypotheses. Here, the investor actively seeks favorable news to support their investment thesis and disregards unfavourable coverage, which aligns precisely with confirmation bias.
Option d: Loss aversion bias describes the tendency to prefer avoiding losses over acquiring equivalent gains, leading to risk-averse behavior. The situation centers on information filtering rather than the heightened sensitivity to potential losses versus gains, so loss aversion doesn’t capture the described behavior.

In summary, the behavior described—actively seeking only supportive information while ignoring contrary evidence—fits the pattern of confirmation bias best, as it directly demonstrates a cognitive preference for information that confirms a preexisting belief rather than presenting a balanced assessment.

FINS5548-Financial Technology - T3 2025

After buying stock ABC, you actively search for favourable news and analysis on ABC to support your investment thesis while ignoring any unfavourable coverage. What kind of bias is this?

View Explanation

Log in for full answers

Similar Questions

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

The CVP and break-even analysis are supported by a range of important assumptions. Which of the following is not an assumption of the CVP:

The break-even point is that at which:

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler