After extended periods of positive earnings, analysts expect this trend to continue even after companies begin to report disappointing results (and, presumably, there are objective reasons to expect this trend to continue). This is known as:

A. conservatism bias
B. confirmation bias
C. availability bias

Correct Answer: A

A conservative bias is a bias in which people hold onto old ideas or views while reluctantly accepting new contradictory or disruptive information. By and large, people often tend to underestimate new information and, instead, overestimate their predictions regarding an event. This leads to inaccurate judgments and inadequate responses to a new situation.