Proceedings

• first option
• second option.
b. Assume that you prepare to retirement. You need 50.000 RON per year to live
comfortably but you could live with 40.000 RON and you could survive in the
extremis with 30.000 RON. In the second step, assume that there is no
inflation. Now you have to choose among two hypothetical investments.
The first choice will secure you an income able to cover your main living
expenses but you will be never able to have a high living standard. In the
second alternative you have 50% chances to have a high living standard
(50.000 RON) and 50% chance to have to live with 30.000 RON. What would
you chose?
• first option
• second option.
5.5. Conservatism bias
Assume that you live in Covasna and you make a prediction that sound like this: I
believe that in this winter will be a lot of snow. You are realising that you are in the
middle of February and there were no snow. What is your natural reaction to this
information?
• there is still time to snow, so my prediction still can be correct
• there is still time to snow but it is possible to have been mistaken
• my experience tells me that my prediction is probably incorrect. The winter
almost have passed.
What your natural reaction could be when you hear some news that could negatively
affect your investments?
• I am tempted to ignore them because I have already made my investment
• I will revaluate the initial reasons I had but probably I will stick to the initial
decision because usually I am doing this
• I will revaluate the reasons that determined me to initially buy the stock and I
will decide what to do after analysing all the determinants.
5.6. Hindsight bias
Assume you have made a bed investment. What is your natural reaction to that?
• Normally I will not blame myself because it could be a misfortune. I wil sell
the shares and I will move on
• I would want to know why I have failed. Usually I have a pretty good
fundament decision system and I have to realise what motivates the
performances of my investments.
Assume you have thought to include open-end funds units in your portfolio. You
analysing their performances. What is your natural approach when you are evaluating
their performances?
• I am tempted to look at the historical performances comparing them with a
certain referential. I am not interested in the strategy the manager applies. I
am interested just in results. If the results are not satisfying I prefer not to
choose it.
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