#analyst-notes #market-efficency
Overconfidence
Most people consider themselves to be better than average in most things they do. For example, 80% of drivers contend that they are better than "average" drivers. Is that really possible? Studies show that money managers, advisors, and investors are consistently overconfident in their ability to outperform the market. Most fail to do so, however.
Other behavior theories include representativeness, gambler's fallacy, mental accounting, etc.
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Subject 4. Behavioral financeill base decisions on perceived losses rather than perceived gains. Thus, if a person were given two equal choices, one expressed in terms of possible losses and the other in possible gains, people would choose the former.
<span>Overconfidence
Most people consider themselves to be better than average in most things they do. For example, 80% of drivers contend that they are better than "average" drivers. Is that really possible? Studies show that money managers, advisors, and investors are consistently overconfident in their ability to outperform the market. Most fail to do so, however.
Other behavior theories include representativeness, gambler's fallacy, mental accounting, etc.
Information Cascades
Information cascading is defined as a situation in which an individual imitates the trades of other market participants and Summary
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