Question

Imagine that you're a contestant on a game show in which you must answer multiple-choice questions. Your current winnings are $20,000. A question comes up that will double your winnings if you answer correctly - taking you to $40,000 - or reduce your winnings to nothing if you answer incorrectly. You may do one of two things: take your $20,000 and walk away; or answer the question and end up with either $0 or $40,000. You reason that you have a 60% chance of answering the question correctly. However, you decide to walk away instead of answering. What type of bias does this choice represent?

Answer 1

The bias represented in this choice is called a loss aversion bias, which is the tendency to strongly prefer avoiding losses over acquiring gains.

Step-by-step explanation:

The bias represented in this choice is called a loss aversion bias. Loss aversion bias is the tendency to strongly prefer avoiding losses over acquiring gains. In this scenario, the contestant decides to walk away and keep the $20,000 winnings because they are averse to the possibility of losing it all. They prioritize avoiding a potential loss over the chance of doubling their winnings.