- Overconfidence
- Projecting the immediate past in the distant future
- Herd-like behaviour (social proof) driven by a desire to be part of the crowd; or an assumption that the crowd is omniscient
- Misunderstanding randomness; seeing patterns that don’t exist
- Commitment and consistency bias
- Fear of change, resulting in a strong bias for the status quo
- “Anchoring” on irrelevant data
- Excessive aversion to loss
- Using mental accounting to treat some money (such as gambling winnings or an unexpected bonus) differently than other money
- Allowing emotional connections to override reason
- Fear of uncertainty
- Embracing certainty (however irrelevant)
- Overestimating the likelihood of certain events based on very memorable data or experiences (availability bias)
- Becoming paralyzed by information overload
- Failing to act due to an abundance of attractive options
- Fear of making an incorrect decision and feeling stupid (regret aversion)
- Ignoring important data points and focusing excessively on less important ones; drawing conclusions from a limited sample size
- Reluctance to admit mistakes
- After finding out whether or not an event occurred, overestimating the degree to which one would have predicted the outcome (hindsight bias)
- Believing that one’s investment success is due to wisdom rather than a rising market, but that failures are not one’s fault
- Failing to accurately assess one’s investment time horizon
- A tendency to seek only information that confirms one’s opinions or decisions
- Failing to recognize the large cumulative impact of small amounts over time
- Forgetting the powerful tendency of regression to the mean
- Confusing familiarity with knowledge