heuristics Flashcards
1
Q
Heuristics 7 of them?
A
- Representative heuristic.
- Preference for familiarity
- Anchoring & adjusting heuristic
- Illusion of Truth
- Availability heuristic
- Illusion of Control
- Mental Accounting
2
Q
Self Deception Mechanisms:
A
- Overconfidence
- Optimism & Wishful thinking
- Emotion over-riding
3
Q
What is Loss Aversion
A
the disutility of giving up an object is greater than
the utility associated with acquiring it”
– Investors will take on more risk to regain a loss than they will
accept to win a similar amount
– Investors more likely to sell winning stocks and hang on to losing
stocks (known as “disposition effect”)
