Investment Decision-Making and Hindsight Bias
نویسنده
چکیده
We investigated the relationships between investment decision making and hindsight bias. Economic studies consider the agent’s foresight perspective only, without taking into account the hindsight bias possible effects in the decision-making process. We studied the subject’s overall perceived error by focusing on the causal relations between the estimate and memory errors and by analysing his confidence in estimates and memories, therefore, his meta cognitions.We found strong evidence for the consequences that hindsight bias can have on the investor’s portfolio decisions: the portfolio allocation perception and therefore, the risk exposure.
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Impact of Cognitive Biases in Investment Decisions of Individual Investors in Stock Market
Individuals’ decision on investment in stock market is affected by so many factors which are influenced by their day to day affairs. Behavioural biases may creap into their investment decisions such as Representativeness Bias, Illusion of Control Bias, Hindsight Bias, Cognitive Dissonance Bias, Self-attribution Bias, Loss Aversion Bias, Regret-Aversion Bias, Over-optimism Bias and Herding Bias ...
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