Behavioural factors

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Last updated 11:28 AM on 5/21/26
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9 Terms

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overconfidence

  • over-estimate the potential benefits of the IT upgrade

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Representativeness

  • judgement too focused on a representative observation rather than statistical evidence

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Narrow framing

  • focus on one factor and not consider the broader picture

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Miscalculation of probabilities

  • investors attach too low a probability to likely outcomes or too high probability to less likely outcomes

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Ambiguity aversion

  • afraid of investments where there is a lack of information

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Extrapolative expectations

  • investors may expect share prices to continue to follow past trends

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Cognitive dissonance

  • continue to hold long term beliefs even if there is evidence to contradict those beliefs

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Availability bias

  • pay more attention to facts which are more prominent in their minds

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Conservatism

  • naturally conservatibe and resistant to changes in opinion