Biases Flashcards
Affect Heuristic
Deal with judging something good or bad. do they like or dislike some company based on non financial issues.
Anchoring
attaching or anchoring ones thoughts to a reference point.
availability heuristic
relying upon knowledge that is readily available to his or her memory.
bounded rationality
limited by available information
confirmation bias
focusing on information that supports their opinions
cognitive dissonanance
tendency to misinterpret info that is contrary to an existing opinion or only pay atttention to info that supports their opinion.
disposition affect
regret avoidance. dont account for real price changes but a value in their mind.
familiarity bias
over/understimating the risk of investments with which they are familiar/unfamiliar
gamblers fallacy
incorrect understanding of probabilities that can lead to faulty predictions.
herding
people follow the masses
hindsight bias
predicting the future based upon what happened in the past
illusion of control
overestimating your ability to control events.
overconfidence
too much confidence in ones self and your own knowledge ignoring what others might know.
overreaction
overreacting to new info
prospect theory
basing decisions on perceived gains instead of losses
