Thursday, 23 February 2012

Financials and Behavioural economics

The Big List of Behavioral Biases

This site could well be one of the internet's best kept secrets, I particularly liked these points ( full credit goes to the author of the site in the link above ) ....

Ambiguity Aversion: we don't mind risk but we hate uncertainty

Barnum Effect: we see insightful information in random rubbish

Choice Overload: too much choice makes us indecisive

Denomination Bias
: we're more likely to spend small denomination notes than large ones

Hindsight Bias
: we're unable to stop ourselves thinking we predicted events, even though we're woefully bad at predicting the future

Information Overload
: too much information reduces the accuracy of the results we produce from it

Less-is-More Effect: the less knowledge you have the more accurate your predictions

Loss Aversion: we do stupid things to avoid realizing a loss

Reciprocity: our sense of fairness will override economic rationality

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