Behavioral Finance

Question 1

Affect Heuristic

Answer 1

cognitive bias that plays a role in decision-making. Instead of using objective information, we rely upon our emotions to evaluate a situation.

影响启发式
亦會導致認知偏誤（cognitive bias）。 心理學家Slovic等等在2002年指出我們在較倉促下決定時可能會摻入太多情感，

Question 2

Anchoring

Answer 2

subconscious use of irrelevant information, such as the purchase price of a security, as a fixed reference point (or anchor) for making subsequent decisions about that security.

client believes a stock that falls 10% from its high is likely to return to that high. he is fixated on that high price.

Question 3

Availability Heuristic

Answer 3

The tendency of investors to extrapolate their personal trends and consider them to be the market reality.

人們在討論一个特定的主題、概念、方法或做出決定時，依賴於腦海中直接浮現的例子

可得性启发法

Question 4

bounded rationality

Answer 4

describes the way that humans make decisions that departs from perfect economic rationality, because our rationality is limited by our thinking capacity, the information that is available to us, and time. Instead of making the ‘best’ choices, we often make choices that are satisfactory

Question 5

confirmation bias

Answer 5

Our tendency to cherry-pick information that confirms our existing beliefs or ideas.

Question 6

cognitive Dissonance

Answer 6

a mental conflict that occurs when your beliefs don’t line up with your actions.

Question 7

Disposition Effect

Answer 7

relates to the tendency of investors to sell assets that have increased in value, while keeping assets that have dropped in value

处置效应

Question 8

Familiarity Bias

Answer 8

when investors tend to invest in what they know, such as domestic companies or locally owned investments. and tend to overstimate/underestimate.

Question 9

gambler’s fallacy

Answer 9

an individual erroneously believes that the onset of a certain random event is less likely to happen following an event or a series of events.

蒙地卡罗谬误，是一种错误的信念，以为随机序列中一个事件发生的机会率与之前发生的事件有关，即其发生的机会率会随着之前没有发生该事件的次数而上升。 如重复抛一个公平硬币，而连续多次抛出反面朝上，赌徒可能错误地认为，下一次抛出正面的机会会较大。

Question 10

Herding

Answer 10

follow the masses
- buying high
- selling low

放牧

Question 11

hindsight bias

Answer 11

tendency to look back at an event that we could not predict at the time and think the outcome was easily predictable

后见之明偏误 事後孔明

Question 12

Illusion of control bias

Answer 12

tendency of human beings to believe that they can control or at least influence outcomes when, in fact, they cannot.

指出人們以為自己可以控制或影響其實他們並無法影響的結果。ex: 我選的人不會被選上

Question 13

Overconfidence bias

Answer 13

overestimate their understanding of financial markets or specific investments and disregard data and expert advice.
受到诸如信念、情绪、偏见和感觉等主观心理因索的影响，人们常常过度相信自己的判断能力,高估自己成功

Question 14

prospect theory

Answer 14

Prospect theory assumes that losses and gains are valued differently, and thus individuals make decisions based on perceived gains instead of perceived losses. Also known as the “loss-aversion” theory, the general concept is that if two choices are put before an individual, both equal, with one presented in terms of potential gains and the other in terms of possible losses, the former option will be chosen. avoid higher risk investment but strong risk adjusted return. over insure agaist risk

前景理论认为人们通常不是从财富的角度考虑问题，而是从输赢的角度考虑，关心收益和损失的多少。

展望理论

Question 15

Recency

Answer 15

People tend to put too much emphasis on recent events. This bias may lead investors to think that a current stock market downturn or rally will extend into the future. Recency bias can lead clients to make short-term decisions that deviate from their financial plans.

人們在判斷事物發展趨勢時，會認為未來事件將會和近期體驗高度類似

近因偏差