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Definition of 'Cognitive Dissonance'
The unpleasant emotion that results from believing two contradictory things at the same time. The study of cognitive dissonance is one of the most widely followed fields in social psychology. Cognitive dissonance can lead to irrational decision making as a person tries to reconcile his conflicting beliefs.
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Investopedia explains 'Cognitive Dissonance'
Let's say an investor decides in advance that he is going to purchase shares of a firm when the price drops to $78 a share. The price is currently at $80 a share. All of a sudden, the company's stock price starts going up. The investor's belief that the stock would be a good buy at $78 seems to be contradicted by the stock's current behavior. The investor decides to buy at $85 instead of $78 to reconcile the cognitive dissonance he is experiencing. This may not be as good of an investment decision, but the investor will rationalize himself into thinking it is, mainly to get rid of his feeling of cognitive dissonance.
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Search results for 'Cognitive Dissonance'
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http://www.investopedia.com/articles/financial-theory/10/cognitive-dissonance.asp
... Whatever the name, this behavior needs to be avoided. The concept of cognitive
dissonance will be familiar to those who have studied marketing. ...
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http://www.investopedia.com/articles/basics/09/psyche-ready-bull-market.asp
... this, the investor could be suffering from "confirmation bias." Confirmation bias
is a result of our brains trying to avoid cognitive dissonance, or having two ...
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http://financialedge.investopedia.com/financial-edge/1210/6-Psychological-Traps-That-Make-You-Spend.aspx
... This occurs as a result of what's called "cognitive dissonance," which can create
the need to feel more positive about a purchase because discomfort was ...
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http://stocks.investopedia.com/stock-analysis/2012/Figuring-Out-Apple-Feels-Like-A-Sisyphean-Task-AAPL-HPQ-DELL-RIMM0126.aspx
... Spare a moment of pity for the Apple (Nasdaq:AAPL) bears and shorts, as they have
another difficult day ahead of trying to get over their cognitive dissonance. ...
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http://www.investopedia.com/articles/trading/07/indicators_fail.asp
... Stock screens continued to turn up more candidates to buy and cognitive dissonance
(or the anxiety that results from simultaneously holding contradictory or ...
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