Pabili pong yelo
A field that merges psychology and economics to explain irrational investor behavior.
Behavioral finance
The belief that markets are always efficient and investors are rational is central to _____.
Traditional finance
The tendency to assign more value to things we already own is the _____ effect.
Endowment effect
Fear and greed are common emotional drivers of _____ behavior.
Investor
_____ challenges the idea that investors always act in their best financial interest.
Behavioral finance
Behavioral finance differs from traditional finance by incorporating _____.
Psychology
The tendency to favor information that supports one's beliefs is known as _____.
Confirmation bias
_____ bias causes investors to think they can control or influence outcomes they cannot.
Illusion of control
_____ occurs when investors give more weight to current information than historical data.
Recency bias
_____ is the tendency to rely too heavily on the first piece of information encountered.
Anchoring
Rational behavior and profit maximization are assumptions in _____.
Traditional finance
Emotional reactions that cloud financial judgment are part of _____ biases.
Emotional
When people act based on emotional reaction rather than logic, they are exhibiting _____ decision-making.
Irrational
When people fear change and prefer the current situation, they exhibit _____ bias.
Status quo bias
A trader believing they can predict the market due to confidence in their skill reflects _____.
Overconfidence
Behavioral finance accepts that decisions may be driven by _____ and cognitive biases.
Emotions
_____ is when people experience more distress from losses than pleasure from equivalent gains.
Loss aversion
The mental process of classifying funds into separate accounts is called _____.
Mental accounting
Behavioral finance helps explain market anomalies like bubbles and _____.
Crashes
The reluctance to sell assets that have decreased in value is referred to as the _____ effect.
Disposition effect
Traditional finance relies heavily on the _____ hypothesis
Efficient market
Misjudging the probability of events based on personal experiences reflects _____.
Availability bias
ANN KHRESMA RED-SERRANO
The idea that people evaluate outcomes relative to a reference point is called _____.
Prospect theory
_____ occurs when investors continue funding a poor investment to justify earlier decisions.
Escalation of commitment