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Cognitive biases lead us to faulty money decisions from "summary" of A psicologia financeira by Morgan Housel
Our minds are wired in a way that often leads us to make faulty money decisions. This happens because of cognitive biases, which are systematic patterns of deviation from rationality in judgment. These biases can cloud our judgment and lead us to make decisions that are not in our best financial interest. One common cognitive bias is the anchoring bias, where we rely too heavily on the first piece of information we receive when making decisions. For example, if we see a stock price drop significantly, we may anchor on that price and be hesitant to sell, even if it is the rational thing to do based on other factors. Another bias is the confirmation bias, where we seek out information that confirms our preexisting beliefs and ignore information...
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