Bias in Behavioral Finance

[Suba]

Bias in Behavioral Finance refers to a person's financial behavior/decisions that are often influenced by psychological factors, not based on objective data and information, but rather on irrational decisions that often result in financial losses. The following are some behavioral finance biases that occur among retail investors:
1. Overconfidence Bias
2. Representativeness Bias
3. Confirmation Bias
4. Herding Bias
5. Loss Aversion Bias

 

[Min George]

I think the most significant one is herding bias where you make disastrous financial decisions based on the fact that other people are making same.