Psychological Biases in Behavioral finance explained!

Some of the most common psychological biases in finance include:

1. Confirmation bias: In simple terms, confirmation bias involves constantly seeking answers that confirm pre-existing ideas or beliefs.
2. Status quo bias: This is the tendency to maintain current beliefs or viewpoints. It can be a dangerous bias as it may stem from general laziness in implementing changes to one's views.
3. Overconfidence bias: This bias involves overestimating accuracy when predicting a model or belief. Spending time and effort on something may lead to overconfidence in the thought process.
4. Prudence bias: This bias involves the tendency to be overly cautious and reduce extreme views on finance.
5. Availability bias: This bias involves the tendency to rely more on recent or easily recalled events rather than others.