Malkiel argues that experiments by Kahneman and other behavioral psychologists s

Question

Malkiel argues that experiments by Kahneman and other behavioral psychologists show that "people set far too precise confidence intervals for their predictions. They exaggerate their skills and tend to have a far too optimistic view of the future." How do these biases manifest themselves in the stock market? More than one answer may be correct. To earn full credit, you must select all of the correct answers and none of the incorrect answers. Many individuals trade too much. Many individuals save for retirement in index mutual funds. Many individuals speculate more than they should. Many individuals invest too conservatively by holding more bonds than they should.

Explanation / Answer

Example of "people set too precise confedence interval for their predictions " are, many individual save for retirement in index fund . since risk in index fund is high, even people are too optimistic that index will rise in future, also many speculate more than they should by taking exta risk.

Option (B) and (C) is correct answer.

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