Cognitives Erros (not Emotional) Flashcards
Coservatism Bias
Failing to change a view as new information become available.
May investors keep assets too long
Confirmation Bias
Seek out new information
That SUPORT their beliefs
AVOID conflict news
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Consequences
hold a disproportional amount of their investments in employing companies
Hindsight bias
Selective memory of past events
Individuals believing these events were predictable (overconfidence)
Than they seemed before happened
Consequence
Unfairly assesses money manager
Belief Perseverance Bias
Mental discomfort
Holding beliefs x news information
Cognitive dissonance
Representative Bias
Classify new information
Based on past experiences
Illusion of control bias
Believe that they control or influence outcomes
Processing erros
Information been processed and used illogically or irrationally
Framing bias
Information processing bias in wich a person answers a question
Based on the way it was asked
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Consequences
Misidentify risk tolerances because the questions were made wrong
Focus on short term price flutuations
Availability Bias
Information processing based on
EASILY information
Narrow range
