Investors who are more likely to buy a stock if they see something about it in the news or if it has a high one-day return are experiencing

Question

A. an ethical dilemma.
B. ethnocentrism.
C. the recency effect.
D. reverse discrimination.
E. self-serving bias.

Answer 1

C. the recency effect.

The recency effect is the tendency to remember recent information better than earlier information. This misperception often operates among investors (even professionals), who are more likely to buy a stock if they see something about it in the news or if it has a high one-day return.