Investors tend to exhibit confirmation bias from "summary" of Beyond Greed and Fear:Understanding Behavioral Finance and the Psychology of Investing by Hersh Shefrin
Investors have a natural tendency to seek out information that confirms their pre-existing beliefs. This means that they pay more attention to information that supports what they already think, while disregarding or downplaying evidence that goes against their views. This tendency, known as confirmation bias, can lead investors to make decisions based on incomplete or biased information. Confirmation bias can be particularly harmful in the world of investing, where decisions can have significant financial consequences. By only seeking out information that supports their beliefs, investors may overlook key data points that could challenge their assumptions and lead to more well-rounded decision-making. This narrow focus can result in missed opportunities or increased risks in investment portfolios. One common...
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