Behavioral Finance Flashcards
A strategy that ignores part of the information, with the goal of making decisions more quickly, frugally, and/or accurately than more complex and thorough methods.
Heuristics
啟發式
The tendency of investors to become attached to a specific price as the fair value of a holding.
Anchoring
繫住
attached Special price
Holding onto an investment for emotional reasons rather than considering more practical applications for the inheritance.
Attachment Bias
The feeling that because you own an asset, it is more valuable and special just because it is yours.
Endowment Bias
才能
Own asset that believe more value
The challenge of reconciling two opposing beliefs.
Cognitive Dissonance
認識不一致
The tendency to accept any information that confirms our preconceived beliefs and disregard that which does not.
Confirmation Bias
Investors tend to diversify evenly across all options presented to them.
Diversification Errors
Diverse evenly across all option
The tendency to take no action rather than making the wrong one.
Fear of Regret
(To make error)
Erroneously believing that the onset of a certain random event is likely to happen following an event or series of events.
Gambler’s Fallacy
謬誤
The tendency for individuals to mimic the actions of a larger group.
Herd Behavior
The 20/20 vision we have when looking at a past event and thinking we understand it, when may reality we may not.
Hindsight Bias
The tendency to look at events (or market performance) and assume that those events or conditions will continue indefinitely.
Inappropriate Extrapolation
When one sees a situation as too complicated and a decision is never made, due to fear of a larger problem arising from making a mistake.
Analysis Paralysis
Taking big risks to avoid emotional pain of loss.
Loss Aversion and Risk Taking
Losses cause more pain than equal gains bring joy.
Prospect Theory
