Bias and misinformation shape investment decisions from "summary" of The Money Culture by Michael Lewis
In the world of investing, decisions are not always made on a purely rational basis. Bias and misinformation can play a significant role in shaping the choices that investors make. These biases can stem from a variety of sources, including personal experiences, cultural beliefs, and even the influence of others. One common bias that can impact investment decisions is overconfidence. Investors may believe that they have more information or expertise than they actually do, leading them to take on more risk than they should. This overconfidence can be fueled by past successes or simply a lack of awareness of the potential pitfalls. Another bias that can cloud judgment is the anchoring effect. Investors may fixate on a particular piece of information, such as a stock price or analyst recommendation, and use...
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