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Behavioral biases affect financial decisionmaking from "summary" of The Psychology of Money by Melody Jefferson,Morgan Housel
When it comes to managing money, humans are not always rational beings. In fact, we often make financial decisions based on our emotions, beliefs, and biases. These behavioral biases can have a significant impact on the way we handle our finances, leading us to make choices that may not always be in our best interest. One common behavioral bias that affects financial decision-making is overconfidence. People tend to believe that they are more knowledgeable and skilled than they actually are when it comes to investing and managing money. This overconfidence can lead to excessive risk-taking and poor decision-making, ultimately resulting in financial losses. Another bias that influences financial decisions is loss aversion. People tend to feel the pain of losing money more acutely than the ple...
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