When Sheila is 16 years old (a minor), she enters into a contract to purchase an automobile costing $20,000 from Brian, a competent adult. Brian, who believes that Sheila is an adult, does not ask for verification of her age, and delivers ownership of the automobile to Sheila after he receives her payment of $20,000. Subsequently, before Sheila reaches the age of 18 (the age of majority), she is involved in an automobile accident caused by her own negligence. The automobile sustains $7,000 worth of damage in the accident (the automobile is now only worth $13,000). If Sheila disaffirms the contract and returns the damaged vehicle to Brian, he has to pay her .

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

the third answer is correct.