Behavioral biases can impact asset allocation decisions from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Behavioral biases, such as overconfidence, loss aversion, and hindsight bias, can significantly influence the decisions we make when it comes to allocating assets in our investment portfolios. These biases are deeply ingrained in human behavior and can lead investors to make irrational choices that may not align with their long-term financial goals. For example, overconfidence bias can cause investors to believe they have more knowledge and skill than they actually possess. This can lead them to take on excessive risks in their asset allocation, thinking they can outperform the market when in reality, they...
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