Woo-Hoo!  Finally, the last day of cognitive biases in investing! Let’s dive right in… 
Self serving bias is pretty similar to the fundamental attribution error.  The Fundamental attribution error says that other peoples successes and failures are a direct result of their actions while our own are attributed to situational factors. The self serving bias is [...]

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I was eating lunch at Tropical Smoothie Cafe yesterday when my friend turned to me and said “Dude, that [amazingly cute] girl over there is totally checking you out”.  I quickly dismissed his comment but he kept persisting, “No seriously, she keeps looking over at you”.  I probably just had some mustard on my face [...]

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Today’s cognitive bias is anchoring and its not only something I try to avoid in investing, it’s also something that I exploit in negotiations.  And you can too!  
When you’re negotiating and you know the inherent value of something, you can easily barter a fair price.  But when you’re unsure of an item’s value and the other [...]

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“Whenever someone else performs poorly or makes a mistake, it’s a direct result of their actions.  Whenever I make a mistake, it’s because of a circumstance I had no control over!”
This is the underlying position of the fundamental attribution error.  We have a tendency to over emphasize the result of other people’s actions as personality-based.  [...]

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How many of you knew that the Boston Celtics would win the NBA Finals?  Or that Tiger would win the U.S. Open?  Well how sure were you last week?
Or… you’re sitting at a Blackjack table in Las Vegas with a 7 and 5, the dreaded 12.  Do you stay or hit?
Stay: Dealer flips over and has [...]

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Yesterday, I wrote about what a cognitive bias is and listed six of them that can affect our psyche and the way we invest.  Today, I’ll go into detail on the first one: confirmation bias.  Confirmation bias describes our tendency to interpret information in a certain way to confirm what we already believe.  It also describes [...]

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For anyone that’s ever taken a Psychology or Behavioral Science class, you probably learned about something called “cognitive bias” (if you remember learning it… now that’s a different story).  Cognitive biases include a wide array of observed effects in social psychology that explain many of our inherently human biases.  Rather than looking at another technical side of investing, I [...]

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