BF_v2_Final

Question 1

Belief Perseverance (Cognitive)

Answer 1

RICCH

1. Representativeness
2. Illusion of Control
3. Conservatism
4. Confirmation Bias
5. Hindsight Bias

Question 2

Processing Errors (Cognitive)

Answer 2

FAMA

1. Framing
2. Availability
3. Mental Accounting
4. Anchoring & Adjustment

Question 3

Behavioural Biases

Answer 3

LOSERS

1. Loss aversion
2. Overconfidence
3. Self-control - investors fail to act in their long-term best interest, lack self-discipline
4. Endowment - believe an asset held is more valuable than if they didn’t own it and were to price it
5. Regret Aversion - avoid making decisions for fear of making the wrong decision
6. Status Quo