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Answer: Participating in herding behavior to avoid future regret
**Explanation:** Regret-aversion bias is an emotional bias where individuals avoid making decisions to prevent potential regret. Financial market participants (FMPs) may engage in herding behavior, opting for popular investments to minimize the risk of future regret. This behavior aligns with the regret-aversion bias. - **Option B** is incorrect because excessive borrowing to finance present consumption is associated with self-control bias, not regret-aversion bias. - **Option C** is incorrect because misidentifying risk tolerances due to question framing is a consequence of framing bias, not regret-aversion bias.
Author: LeetQuiz Editorial Team
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Which of the following is a potential consequence of regret-aversion bias for financial market participants?
A
Participating in herding behavior to avoid future regret
B
Excessive borrowing to fund current consumption due to lack of self-control
C
Misinterpreting risk tolerance levels due to the framing of questions
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