Question
As you know, there are some behavioral biases and information processing biases according to behavioral finance. Prospect theory, framing, mental accounting Heuristics (familiarity, representativeness &
As you know, there are some behavioral biases and information processing biases according to behavioral finance.
Prospect theory,
framing,
mental accounting
Heuristics (familiarity, representativeness & anchoring)
Overconfidence
Emotions (mood, pride, regret, disposition effect, path dependent behavior (house money break even effect snake bit effect))
Forecasting errors
Active trading
Slow beliefs respond to new evidence
Small sample
Now, do the following:
Find at least one real case example when it seems that market is far from efficient as investors behave irrationally. Do your research and try to explain the anomalies with any of the biases listed above (can be one or some combinations of them).
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