See One Long Argument: A Big List of Behavioral Biases, as an introduction to this ever-growing list of irrational or, at least, slightly odd behaviours in the sphere of investment:
- Adverse Selection: you should only offer health insurance to those who don't need it: see Dark Pools and Adverse Selection.
- Affect Heuristic: we use feelings not logic to make snap decisions, even when we don't need to: see Risk, Stone Age Economics and the Affect Heuristic.
- Akerlof's Lemons: why the market for used cars doesn't work properly: see Akerlof's Lemons: Risk Asymmetric Dangers for Investors.
- Ambiguity Aversion: we don't mind risk but we hate uncertainty: see Ambuiguity Aversion: Investing Under Conditions of Uncertainty.
- Anchoring: our habit of focusing on one salient point and ignoring all others, such as the price at which we buy a stock: see Anchoring: the Mother of Behavioral Biases.
- Attention, Limits of: our inability to attend to multiple things, and the way this is exploited: see Zombies in the City of London.
- Authority, Appeal to: we tend to thoughtlessly obey those we regard as being in positions of authority: see CEO Pay: Because They're Worth It?.
- Babe Ruth Effect: winning big but rarely beats winning often and small: see It's How Big, Not How Often, That Counts.
- Backfire Effect: if you present some people with evidence contradicting their beliefs it will make them believe them all the more: see Backfiring Investment Theories.
- Barnum Effect: we see insightful information in random rubbish: see Your Financial Horoscope.
- Beauty Effect: we attribute qualities to people based on their appearance: see Trust is in the Eye of the Beholder.
- Benford's Law: in finance numbers starting with 1 are more frequent than those starting 2 and so on: see Forensic Finance, Benford's Way.
- Bias Blind Spot: we agree that everyone else is biased, but not ourselves: see Bamboozled By Your Blind Spot Bias.
- Bystander Effect: people waiting for others to take the lead when someone else in is trouble: see A Lollapallooza Effect: Capitalism & The Death of Wang Yue.
- Choice Overload: too much choice makes us indecisive: see Jam Today, Tyranny Tomorrow?
- Clever Hans Effect: we give off unconscious cues that are unconsciously picked up on: see Market Confidence, Tricks and Placebos.
- Cognitive Dissonance: the effect of simultaneously trying to believe two incompatible things at the same time; see Fairy Tales for Investors.
- Commitment Bias: once we'e publicly committed ourselves to a position we find it difficult to retreat: see Robert Cialdini and the Weapons of Influence.
- Confirmation Bias: we interpret evidence to support our prior beliefs and, if all else fails, we ignore evidence that contradicts it: see Confirmation Bias, the Investor's Curse.
- Conjunction Fallacy: the conjunction of two events is always less likely than a single event: see Behavioral Finance's Smoking Gun.
- Conversational Bias: we tend to present ourselves in the best possible light, which has knock-on consequences for the relaying of positive and negative information: see Herd of Investors.
- Data Mining Errors: if you mine the data hard enough you can prove anything: see Twits, Butter and the Superbowl Effect.
- Data Snooping Bias: see Data Mining ErrorsExploiting the Anomalies.
- Denomination Bias: we're more likely to spend small denomination notes than large ones: see Fooled by Fluency.
- Disaster Myopia: an in-built tendency to forget really nasty stuff after it's stopped happening for a while: see Black Swans,Tsunamis and Cardiac Arrests.
- Disposition Effect: we prefer to sell shares whose value has increased and keep those whose value's dropped: see Disposed to Lose Money.
- Dread Risk: an irrational fear of extreme events: see Dread Risk: Investing Outside the Goldfish Bowl.
- Dunning-Kruger Effect: some people never learn by experience: see Don't Lose Money in the Stupid Corner.
- Economic Reflexivity: the way that the economy changes people's behavior, which changes the economy: see Soros' Economic Reflexivity.
- Easterlin Paradox: between countries, having more money doesn't make you happier: see Gross National Happiness.
- Familiarity Effect: being familiar with something makes you favour it: see The Language of Lucre.
- Fallacy of Composition: the tendency for individuals to act in their own self interest and, in by doing so en-mass, to cause themselves to lose out: see Panic!
- Fallacy of Frequency: we see regular patterns where none exist: see Deep Time and the Fallacy of Frequency.
- False Memory: memory is a construction, not a direct recollection : see Financial Memory Syndrome.
- Focusing Illusion: a specific form of framing caused by getting people to focus on one particular aspect of a situation: see Money Can't Buy You Happiness.
- Framing: the way a question or situation is framed can determine your response: see Investors, You've Been Framed.
- Fundamental Attribution Error: we attribute success to our own skill and failure to everyone else's lack of it: see Profit from Self-Knowledge.
- Gambler's Fallacy: the mistaken belief that a run of specific results in a random process must revert: see Recency, Hot Hands and the Gambler's Fallacy.
- Halo Effect: we take one positive feature of something and apply it to everything else associated with it: see The Halo Effect: What's In A Company Name?
- Handicap Principle: animals take on handicaps to demonstrate their fitness: see Advertising on the Handicap Principle.
- Hawthorne Effect: studying people changes their behaviour: see Be a Sceptical Economist.
- Herding: we tend to flock together, especially under conditions of uncertainty: see Herd of Investors.
- Hindsight Bias: we're unable to stop ourselves thinking we predicted events, even though we're woefully bad at predicting the future: see Hindsight Bias.
- Hot Hand Effect: the erroneous belief that certain runs of success are attributable to skill rather than luck: see Recency, Hot Hands and the Gambler's Fallacy.
- Hyperbolic Discounting: the tendency to extrapolate the cost of future payments out to infinity: see Putting Down The Credit Cards.
- Illusion of Control: we do things that make us feel in control, even if we're not: see The Lottery of Stockpicking.
- Information Overload: too much information reduces the accuracy of the results we produce from it: see The Curse of Seven.
- Instant History Bias: how to create a new fund with a track record: see Survivorship Bias in Magical Mutual Funds.
- Inter-group Bias: we evaluate people within our own group more favorably than those outside of it: see de Tocqueville: Trust in Self-Interest.
- Introspection Illusion: we value information gleaned from introspection more than we value our actions: see Bamboozled By Your Blind Spot Bias.
- January Effect: stocks go up in January, far more than they should: see Rock On January Effect.
- Lake Wobegone Effect: see Overconfidence.
- Law of Large Numbers: the more money you have to invest the harder it is to outperform the market: see Hedge Funds Ate My Shorts.
- Law of Small Numbers: the more samples you have the more likely you are to approximate to the real average: see Sharpshooting the Investment Gurus.
- Less-is-More Effect: the less knowledge you have the more accurate your predictions: see Satisficing Stockpicking.
- Limit Order Effect: limit orders exaggerate apparent behavioral biases: see Limit Orders, on the Crumbling Edge of Behavioral Finance.
- Linda Problem: see Conjunction Fallacy.
- Longshot-Favorite Bias: favorites are underpriced and longshots are overpriced: see Holes in Black Scholes.
- Loss Aversion: we do stupid things to avoid realizing a loss: see Loss Aversion Affects Tiger Woods, Too.
- Man With A Hammer Syndrome: some people have a single tool and see every problem as a nail: see Newton's Financial Crisis: The Limits of Quantification.
- Mental Accounting: we divide our money into different pots and then treat them all separately: see Mental Accounting, Not All Money is Equal.
- Mere Exposure Effect: how merely exposing someone to something means they're more likely to prefer it: see Fooled by Fluency.
- Minsky Moment: the moment people realise they can't repay the debts they owe: see Springing the Liquidity Trap.
- Money Illusion: we value money in absolute not nominal terms: see Money Illusion.
- Monty Hall Problem: three doors and one prize, but which one do you pick: see Monty Hall Economics.
- Moral Hazard: if someone underwrites our failures we're more likely to take risks: see Moral Hazard But Thanks For All The Fish.
- Noise Trading: people trade and synchronise on sentiment rather than fundamentals: see Idiot Noise Traders.
- Observer Bias: observers make errors, but in a particular way based on the normal distribution: see Laplace's Hammer: the End of Economics.
- Overconfidence: we're way too confident in our abilities, which seems to be an in-built bias that we're unable to overcome without excessive effort: see Overconfidence and Over-optimism.
- Persuasion Bias: the tendency to see new information as independent, failing to adjust for repetition: see Herd of Investors.
- Placebo Effect: you can be cured by what you believe in: see Market Confidence, Tricks and Placebos.
- Procastrination: the tendency to prevaricate rather than make difficult decisions that only have a future pay-off: see Retirees, Procrastinate at Your Peril.
- Pseudocertainty Effect: wording a question differently can elict a different response: see The Death of Homo economicus.
- Recency: the tendency to weight recent information more heavily: see Recency, Hot Hands and the Gambler's Fallacy.
- Reciprocity: our sense of fairness will override economic rationality: see When a Dollar's Not Just a Dollar.
- Regret: we don't do things we may regret: see Regret.
- Representative Heuristic: we compare the item under consideration to whatever we happen to bring to mind: see Behavioral Finance's Smoking Gun.
- Round Number Effect: investors seem to be unhealthily attracted to round numbers: see Irrational Numbers; Price Clustering and Stop Losses.
- Sailing-Ship Effect: old technology can improve rapidly under the pressure of innovation: see Disruption by Digital Wallet: The Sailing-Ship Effect Rewritten.
- Satisficing: the idea that we make "good-enough" decisions, rather than rational ones: see Satisficing Stockpicking.
- Seersucker Illusion: for every seer there's a sucker: see James Randi and the Seersucker Illusion.
- Selection bias: choosing unrepresentative samples of humanity in an experiment leads to unrepresentative results: see Weird Markets.
- Self-control: without it we don't make very good investors: see Deep Time and the Fallacy of Frequency.
- Sharpshooter Effect: beware experts painting targets around bullet holes: see Sharpshooting the Investment Gurus.
- Superbowl Effect: random events appear to predict real outcomes, but they don't: see Twits, Butter and the Superbowl Effect.
- Superstition: we can't help believing in beasties that go bump in the night, even in stockmarkets: see Science, Stocks and Superstition.
- Survivorship Bias: this is an error that comes from focusing only on the examples that survive some particular situation: see Survivorship Bias in Magical Mutual Funds.
- Texas Sharpshooter Effect: see Sharpshooter Effect.
- Titanic Effect: if it can't sink you don't need lifeboats: see Trading on the Titanic Effect.
- Tragedy of the Commons: we overuse common resources because it not in any individual's interests to conserve them: see Tragedy of the Financial Commons.
- Unit Bias: we will consume whole units of food, no matter what the unit form: see Unit Bias: Cooking, Dieting and Investing.
- Winner's Curse: winning an auction can lead to you overpaying: see Are IPO's Bitter Lemons?
