Mike McLaughlin is an economist who makes quarterly forecasts for the state of the economy and interest rates. Last quarter, the economy did not grow as fast as McLaughlin predicted. McLaughlin explains that his forecast was inaccurate by stating This change in the economy was due to a real estate market that slowed faster than many forecasters, including myself, expected. If it werent for the real estate market, my projection for GDP would have been accurate. Which of the following is the best interpretation of McLaughlins statement, from a behavioral finance view? McLaughlin is using: A) | an if-only defense for his inaccurate forecasts and this will prevent him from accurately evaluating his own abilities. |
| | B) | a single predictor defense for his inaccurate forecasts and this will prevent him from accurately evaluating his own abilities. |
| | C) | a single predictor defense for his inaccurate forecasts and his recognition of it will sharpen his abilities. |
| | D) | an if-only defense for his inaccurate forecasts and his recognition of it will sharpen his abilities. |
|
Answer and Explanation
McLaughlin is using an if-only defense for his inaccurate forecasts. According to behavioral finance, investors will use excuses to justify their inaccurate forecasts. These excuses will prevent them from accurately evaluating their own abilities. As a result, they will persist in making the same mistakes. | 
发表于 2008-9-16 17:55
| 
