Business
Anchoring bias in financial markets
In financial markets, this cognitive bias can significantly affect investors' decision-making processes, often leading to suboptimal outcomes. Whether it’s the price of a stock, an analyst's prediction, or historical performance, the influence of anchors can skew perceptions and lead to poor investment choices.
By Badhan Sen11 months ago in Chapters
How emotions impact investment decisions
While many investors strive to make logical, data-driven decisions, emotions often have a stronger influence than anticipated. Understanding how emotions impact investment choices can lead to better decision-making and, ultimately, improved investment outcomes. Here's a deeper look at how emotions affect the world of investing.
By Badhan Sen11 months ago in Chapters
Prospect theory explained
It challenges traditional economic theories that assumed individuals act in a purely rational manner when making choices. Instead, Prospect Theory introduces the idea that people value potential losses and gains differently, leading to decisions that deviate from rational expectations.
By Badhan Sen11 months ago in Chapters
Understanding overconfidence bias
This bias is pervasive in various aspects of human behavior, ranging from personal skills to financial investments, and has profound implications for decision-making. Understanding this bias helps individuals mitigate its effects and make more rational, informed choices.
By Badhan Sen11 months ago in Chapters
Loss aversion and its impact on investors
This principle, proposed by psychologists Daniel Kahneman and Amos Tversky in 1979, plays a significant role in decision-making processes, particularly in the context of investing. For investors, loss aversion can lead to suboptimal financial decisions, potentially hurting long-term wealth accumulation. Understanding how this cognitive bias works and its implications can help investors make more informed and rational choices.
By Badhan Sen11 months ago in Chapters
How to analyze financial institutions
It involves examining various factors that determine the performance, stability, and growth potential of banks, insurance companies, investment firms, and other financial entities. Here’s a guide on how to conduct a comprehensive analysis of financial institutions.
By Badhan Sen11 months ago in Chapters
Market microstructure theory
It focuses on the ways that market participants, such as buyers, sellers, and intermediaries, interact with each other and how these interactions impact the pricing, liquidity, and efficiency of financial assets. The theory addresses various aspects of market functioning, such as the role of information, the behavior of market makers, the impact of transaction costs, and the structure of trading mechanisms. By studying these elements, market microstructure theory aims to explain how prices are formed and how they reflect underlying economic fundamentals.
By Badhan Sen11 months ago in Chapters


