Behavorial Question outlook, private, official, investor, behavioral

John10

What is the official behavioral characteristic when a private investor remembers events such as the Great Depression to a high degree and it biases his outlook on the future... What official bias does that fit into?

Unforseen

Representativeness I think?

zwjy

yup recallability trap......................representativeness is when you think past trend represents future

IAmNeil

I just did the 2007 exam and missed a question similar to the situation you just posted. I wrote down Representativeness but the answer is recallability trap.

CFAI Answer/explanation for recallability trap -- tendency of forecasts to be overly influenced by events that have left a strong impression on a person's memory.

ohai

This is why I'm not a fan of the Behavioral definitions...seems like you could argue it's both.

Analyze_This

Just remember, "recallability" occurs when an event has occurred in the past that continues to affect the person financial behaviour, despite that it's happened either long also and there is evidence to show that markets have moved

Remember, it could be a good event as well - for instance someone who made money in the "tech bubble" could continue to think that tech stocks are good

bboo

Yea, i think the distinction between recallability and representativeness is that there has to be a distinct "impression" on the person in the past in order for that person to "recall" and point to that specific event. Representativeness is more of an general assumption...that past represents future.

Analti_Calte

Now we recall recallability trap.