Lucy bought some stock 10 years ago that has been priced at half of her purchase price for the past 5 years.However,Lucy refuses to sell the stock,thinking that,if she waits long enough,she will recover her investment.What type of behavior does this represent?

A) mental accounting
B) bounded rationality
C) risk aversion
D) loss aversion

Question

Taylor Gaines · Accepted Answer

Final Answer : D, Explanation :  This behavior represents loss aversion, where Lucy is unwilling to sell the stock at a loss and is holding onto it in hopes of recovering her initial investment.

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