Behavioral Finance

Question 1

A strategy that ignores part of the information, with the goal of making decisions more quickly, frugally, and/or accurately than more complex and thorough methods.

Answer 1

Heuristics
啟發式

Question 2

The tendency of investors to become attached to a specific price as the fair value of a holding.

Answer 2

Anchoring

繫住
attached Special price

Question 3

Holding onto an investment for emotional reasons rather than considering more practical applications for the inheritance.

Answer 3

Attachment Bias

Question 4

The feeling that because you own an asset, it is more valuable and special just because it is yours.

Answer 4

Endowment Bias

才能
Own asset that believe more value

Question 5

The challenge of reconciling two opposing beliefs.

Answer 5

Cognitive Dissonance

認識不一致

Question 6

The tendency to accept any information that confirms our preconceived beliefs and disregard that which does not.

Answer 6

Confirmation Bias

Question 7

Investors tend to diversify evenly across all options presented to them.

Answer 7

Diversification Errors

Diverse evenly across all option

Question 8

The tendency to take no action rather than making the wrong one.

Answer 8

Fear of Regret
(To make error)

Question 9

Erroneously believing that the onset of a certain random event is likely to happen following an event or series of events.

Answer 9

Gambler’s Fallacy

謬誤

Question 10

The tendency for individuals to mimic the actions of a larger group.

Answer 10

Herd Behavior

Question 11

The 20/20 vision we have when looking at a past event and thinking we understand it, when may reality we may not.

Answer 11

Hindsight Bias

Question 12

The tendency to look at events (or market performance) and assume that those events or conditions will continue indefinitely.

Answer 12

Inappropriate Extrapolation

Question 13

When one sees a situation as too complicated and a decision is never made, due to fear of a larger problem arising from making a mistake.

Answer 13

Analysis Paralysis

Question 14

Taking big risks to avoid emotional pain of loss.

Answer 14

Loss Aversion and Risk Taking

Question 15

Losses cause more pain than equal gains bring joy.

Answer 15

Prospect Theory

Question 16

Looking at sums of money differently, depending on their source or intended use.

Answer 16

Mental Accounting

Question 17

Tendency to make a decision based on the desired outcome rather than the probability of that outcome.

Answer 17

Outcome Bias

Question 18

Tendency to place too much emphasis on one’s own abilities.

Answer 18

Overconfidence

Question 19

Investors emotionally react towards new market information.

Answer 19

Overreaction

Question 20

Tendency to do nothing when action is actually called for.

Answer 20

Status Quo Bias