One of the core problems that created the financial meltdown of ...

[Jipu 123]

One of the core problems that created the financial meltdown of 2008 was that large loans were made to individuals who could not repay them, and the finance companies purchased these bad debts without realizing how poor the prospects of repayment
 
  were. Which of the following decision-making errors was made by the lenders and borrowers?
  A) hindsight bias
  B) availability bias
  C) overconfidence bias
  D) confirmation bias
  E) anchoring bias

Question 2

Which of the following statements is not true regarding values?
 
  A) They are partly determined by our genetically transmitted traits.
  B) They tend to be relatively stable and enduring.
  C) They have both content and intensity attributes.
  D) They carry an individual's ideas as to what is right, good, or desirable.
  E) There is no substantial variability in values across cultures.

[sierramartinez]

Answer to Question 1

C
Explanation: C) When we are given factual questions and asked to judge the probability that our answers are correct, we tend to be far too optimistic. During the financial meltdown of 2008, the lenders and borrowers were overconfident about the ability to pay back loans. This overconfidence bias was clearly a major factor that created the financial crisis.

Answer to Question 2

E
Explanation: E) Values do appear to vary across cultures, meaning that, on average, people's values in one nation tend to differ from those in another.