Emotional Bias in Investment Decisions

Emily, a seasoned investor, has built a diversified portfolio over the years. Recently, she noticed that her real estate investments have underperformed compared to her equities. Despite the fundamentals showing signs of recovery in the real estate market, Emily remains hesitant to increase her allocation to real estate because she remembers the losses incurred during the market downturn. This reluctance is compounded by her friends, who frequently remind her of the many bad experiences in real estate from previous years.

As a result of her emotional responses, Emily sticks to her current allocation and misses several opportunities to capitalize on the rebound in the market. This behavior can be evaluated through the lens of behavioral finance and emotional biases.

Which of the following emotional biases is primarily influencing Emily's decision-making process in this scenario?