Emotional bias

An emotional bias is a bias which stems from impulse or intuition (Emotional biases tend to result from reasoning influenced by feelings). Emotional biases are harder to control for many people because they are based on feelings, which can be difficult to change for some individuals.

In investing, common emotional biases are "loss aversion, overconfidence, self-control (People fail to act in pursuit of their long-term, overarching goals because of a lack of self-discipline), status quo, endowment effect, and regret aversion. Understanding and detecting biases is the first step in overcoming the effect of biases on financial decisions."

List of emotional biases

• List of 20 emotional biases

Status quo emotional bias

See also: Change management

The status quo emotional bias is "in which people do nothing instead of making a change. People are generally more comfortable keeping things the same than they are with change and thus do not necessarily look for opportunities where change may be beneficial. In the absence of an apparent problem requiring a decision, the status quo is maintained. If given a situation where one choice is the default choice, people will frequently let that choice stand rather than opting out of it and making another choice."

See also

• Emotional intelligence
• Risk
• Risk management

External links

• Cognitive vs. Emotional Investing Bias: What’s the Difference?
• Overcoming Six Emotional Biases to Have a Successful Investing Experience