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Question: scenario 4 randy and sharon have just had a...

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Scenario # 4 Randy and Sharon have just had a lot of recent success buying and flipping houses. That is, they find houses that are somewhat cheap to buy, fix them up, and sell them at higher prices. Their recent glory has also been spurred on by the fact the their town in Colorado has been in the midst of a real estate boom. Due to their current success, Randy and Sharon have no reason to believe that their strategy will not continue into the future. So, they take out a second mortgage on their primary home, and continue to buy distressed properties in hopes of fixing them up for future profits. They feel that their current streak will be representative of future results. 1) What behavior/bias is present? 2) Why is this behavior detrimental? 3) What could have been done differently, or what could be done differently next time to avoid this result?

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