Which outcome is a common result of conservatism bias?

Conservatism bias refers to the tendency of individuals to underreact to new information, which leads them to be slow in adjusting their beliefs or decisions in light of new evidence. This bias can cause investors or decision-makers to hold onto outdated views that do not accurately reflect the latest information available.

The most notable outcome of conservatism bias is the failure to act on new information. Instead of making timely adjustments in their portfolios or decisions based on newly released data, individuals influenced by this bias may continue to rely heavily on their prior beliefs or judgments. This results in an inertia that prevents them from responding appropriately to changes in the market or other relevant factors.

In contrast to this outcome, alternatives such as acting decisively on new information or regularly updating beliefs are contrary to the essence of conservatism bias. Being slow to respond or failing to update beliefs effectively means an investor is not adapting to the current situation, which can lead to suboptimal investment decisions and missed opportunities. Therefore, the failure to act on new information aligns closely with how conservatism bias manifests in practice.