Tuesday, August 11, 2015

Behavioral Biases

The CFA Institute recently conducted a member survey regarding which behavioral biases are most impactful. The results are below:



Which of the following behavioral biases affects investment decision-making the most?
Herding -- being influenced by peers to follow trends
 34%
Confirmation -- looking for confirmatory beliefs, overlooking beliefs that disconfirm
 20%
Overconfidence -- overestimating skill and accuracy
 17%
Availability -- judging outcomes by past experiences of similar outcomes
 15%
Loss aversion -- disliking losses more than liking gains
 13%
Others -- not in this list
 1%

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