Last month Laura saw the value of her stock portfolio rise by $20,000. This month she saw the value of her portfolio decline by $20,000. According to behavioral economics,what is average portfolio stock?

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Answer:

Behavioral economics refers to viewing your the economy or your personal finances from an emotional and psychological point of view. Last month's perceived positive utility was offset by the disutility of this month's value decline.

Laura probably believes that she lost $20,000, forgetting about the previous earnings. The actual value of the portfolio vary, but she feels it lost value.