Behavioral Finance And Money scripts Flashcards
What is loss aversion?
Feeling losses more intensely than equivalent gains.
What is confirmation bias?
Seeking out information that supports existing beliefs.
What is recency bias?
Overweighting recent events when making decisions.
What is anchoring?
Relying too heavily on the first piece of information received.
What is overconfidence bias?
Overestimating one’s knowledge or predictive ability.
What is availability heuristic?
Judging probability based on ease of recall.
What is herd behavior?
Following the crowd instead of a personal strategy.
What is mental accounting?
Treating money differently based on its origin or use.
What emotion drives panic selling?
Fear.
What emotion leads to risky behavior in bull markets?
Greed or euphoria.
What is money shame?
Feeling unworthy due to perceived financial failure.
What is status anxiety?
Fear of not appearing successful enough.
How does scarcity mindset affect decisions?
It leads to impulsivity and short-term focus.
What is financial trauma?
Emotional wounds from past financial instability.
What are money scripts?
Unconscious beliefs about money formed early in life.
Example of self-worth money script?
“If I have more money, I’ll be more valuable.”
Example of control-related money script?
“If I control every dollar, I’ll be safe.”
Example of fear-based money script?
“I’ll never have enough.”
Script from scarcity upbringing?
“Spend it now before it disappears.”
ADHD-related money script?
“I’m just bad with money.”
Analogy for confirmation bias?
Googling until you find the answer you want.
Analogy for loss aversion?
Losing your keys feels worse than finding $20 feels good.
Analogy for mental accounting?
Treating tax refunds as play money, ignoring debt.
Analogy for lifestyle inflation?
Turning up the treadmill speed every time you get stronger.
