Question

What are several human traits that tend to affect investment decisions?

Answer 1

Followings are the human traits that tend to affect investments decisions :

1) Representative bias : Investors tend to make judgement based on stereotypes, it helps to make decision in the face of information overload. It can lead to bad decision.

2) Overconfidence : It can lead to downfall of many successful investors & their investments portfolio.

3) Anchoring & adjustment : It is the behaviour where people tend to place too much in stock in their first impression & do not react appropriately to new information.

4) Self control : People impose limit on themselves that make no sense. This is the human traits that can lead to wrong investment decisions.

5) Self attribution bias : This refers to taking credit for good decisions and blaming others for bad decisions. This types of behaviour can leads to terrible investing decisions.

6) Heard distinct : It leads people to follow popular trend without any deep thought of their own. It is an inability to make rational decisions under emotional strains.