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Mr. James (“Mr. J”) is a single, 58 year old, hard-working, international corporatelawyer (an employee of a large multinational company). He earns a salary ofRM600,000 annually. He has residence in both London and New York and generallylives within his annual income net of taxes. He occasionally spends more than his netincome, but in other years he saves and invests. His current portfolio is worthapproximately RM3,500,000. It reached his value primarily because of somesuccessful high risk oil and technology investmentsas well as stock options grantedby his employer. Mr J has no plans for marriage or children. He had a mild heartattack last year, but he has made a full recovery. His primary financial goal is to retirecomfortably at age 65 with a reduced spending level of RM150,000 and to bequeathany assets remaining at his death to his alma mater, Oxford University. Mr. J’sfinancial adviser, Mr Palm Mall, has been working with Mr. J for less than a year.During that time, Mall has proposed a comprehensive financial plan. Despite Mall’srecommendations, however, Mr. J’s asset allocation has remained the same at nearly80 percent equities, with 40 percent in his employing company’s publicly tradedstock. Still, Mall has developed a good working relationship with Mr. J.Mall believes that Mr. J is a well-grounded, fairly rational person, but he also believesthat Mr. J has some behavioral issues to address. In Mall’s view, the most importantissue is that Mr. J has not taken action yet on the new, more conservative allocationthat Mall proposed months ago of 60 percent stocks, 30 percent bonds, and 10 percentcash. Mall worries about the lack of diversification in Mr. J’s portfolio. Mall’s concernus that a severe downward market fluctuation or drop in Mr. J’s employing company’sstock may cause him to sell assets irrationally, affecting his long-term financial plan.Mall’s financial plan demonstrates that even with a somewhat less aggressiveportfolio, Mr. J could still meet his primary financial objective if he could save justRM25,000 annually. Mall believes that one of the issues is that Mr. J thinks of himselfas a very savvy investor because of some risky bets that worked out well for him inthe past. Mall suspects that Mr. J hasn’t changed his allocation because he thinksMall’s allocations recommendation is too conservative. Mall also notices that Mr. Jconstantly worries about missing out on hot stocks that go up because he was notaggressive enough. Mall decides that the appropriate course of action is to Mr. J totake a behavioral bias diagnostic questionnaire. When Mall gets the answers to thequestionnaire, he decides to delve further into three biases: regret aversion,overconfidence, and self-control. Mall asks Mr. J further questions on these three