Biases are human tendencies that lead us to follow a particular quasi-logical path, or form a certain perspective based on predetermined mental notions and beliefs. When investors act on a bias, they do not explore the full issue and can be ignorant to evidence that contradicts their initial opinions. Avoiding cognitive biases allows investors to reach impartial decision based solely on available data.


Some common psychological biases plaguing investors include: representative bias, cognitive dissonance, home bias, familiarity bias, mood and optimism, overconfidence bias, endowment effects, status quo bias, reference point & anchoring, law of small numbers, mental accounting, disposition effects, attachment bias, changing risk preference, media bias and internet information bias.

  1. Reverse Survivorship Bias

    The tendency for low performers to remain in the game, while ...
  2. Home Bias

    The tendency for investors to invest in a large amount of domestic ...
  3. Look-Ahead Bias

    Bias created by the use of information or data in a study or ...
  4. Data Mining

    A process used by companies to turn raw data into useful information. ...
  5. Risk

    The chance that an investment's actual return will be different ...
  6. Survivorship Bias

    The tendency for mutual funds with poor performance to be dropped ...
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