Behavioral Biases Influence on Investment Decision

Behavioral biases are psychological tendencies that can affect investors' decision-making. For instance, overconfidence may lead someone to believe they can predict market movements, resulting in risky investments. Anchoring occurs when investors focus too much on past prices, making them slow to react to new information. Confirmation bias can cause them to seek out information that supports their beliefs while ignoring contrary evidence. These biases can lead to poor financial choices, as emotions and cognitive shortcuts cloud judgment, steering investors away from rational, informed decisions. Understanding these biases can help investors make better choices.