Question

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?

Answer 1

Loss aversion

Step-by-step explanation:

Loss aversion refers to people's tendency to avoid losses to gain equivalent profits.

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. This represents loss aversion.