Conservatism Bias 😐
🧠 Psych - 14 / 100
Hey,
Today we are discussing about Conservatism Bias 😐.
What is it?
Let us understand it with an example,
You used to believe in Santa Claus at the age of 5, 🎅
Time went by and “accidentally”, you came to know by reading somewhere that Santa Claus is not real. 💔
At the age of 10 (or still), you still think about it and take your time to process this. 😐
Where does it occur?
Generally, Investors take time to react to some new information and do it thoroughly, when there are fluctuations in stock prices are occuring because of it.
Why do I need to know?
If you are in an industry where there are frequently, random events happening which can affect the output like stock market, it can help you to know and assess your portfolio / decisions, the right way.
Takeaways:-
Make a list of factors on whose basis you make your decisions where there are chances of Conservatism Bias.
New information can NOT always be the correct information. Sources play an important role here.
References:-
https://www.sciencedirect.com/science/article/pii/S221256711600040X