Loss-Aversion Bias Overconfidence Bias Overconfidence bias is a bias in which people demonstrate unwarranted faith in their own abilities. Overconfidence may be intensified when combined with self-attribution bias, in which people take too much credit for successes (self-enhancing) and assign responsibility to others for failures (self-protecting). Overconfidence has aspects of both cognitive and emotional errors but is…
Belief Perseverance Biases Belief perseverance biases result from the mental discomfort that occurs when new information conflicts with previously held beliefs or cognitions, known as cognitive dissonance. Conservatism Bias Conservatism bias is a belief perseverance bias in which people maintain their prior views or forecasts by inadequately incorporating new, conflicting information.
In general, behavioral biases come in two forms: faulty cognitive reasoning, known as cognitive errors, and those based on feelings or emotions, known as emotional biases. Both forms of bias, regardless of their source, may cause decisions to deviate from what is assumed by traditional finance theory.
Liquidity Requirements Time Horizon Tax Concerns Legal and Regulatory Factors
