How do price expectations influence people’s behavior? Evaluate the risk of your imagined short and long positions, using common sense ideas of risk. 

Price expectations can have a big influence on people’s behavior, particularly when it comes to investing. An investor will often take on more risk in their investment to reach their goal if they have high price expectations. However, a person with lower expectations might choose to invest with fewer risks.

If you look at the risks of both short and long positions from a common sense perspective, the short position usually carries a higher level of risk. You are betting the price will drop over time which can never be predicted accurately. A long position, on the other hand is generally seen as being less risky because you’re betting the price will rise over time. This is easier to predict thanks to the general market trends.

Ultimately, understanding how price expectations can influence people’s behavior when it comes to investing can help investors make more informed decisions and better manage their own risk tolerance levels. By taking into account both one’s own personal financial goals as well as general market conditions before entering into any type of investment position, investors should be able to minimize their overall exposure and optimize potential returns regardless if they decide upon a short or long position.