investor psychology #1 Anchoring Bias

Investor Psychology | Anchoring Bias Explained

In this video, You will learn about Anchoring bias in telugu. This is one video in the Investor psychology series of videos. Anchoring bias is a flaw in our mental thinking in which all the decisions are based on a reference point (Anchor) which is set initially.

 No further modifications to the decision making process is made with new input of data. Anchoring bias can be observed in every walk of life like shopping, marketing and investments. Most investors usually have their purchase price as anchor for all the decisions they take about that investment. This will blind them to new data and information about their investment. Anchoring bias can be overcome in investments by understanding fundamentals of the investments they are doing and understanding and valuing all the new information without considering their purchasing price into account while making such decisions. Another strategy to overcome anchoring bias is to set anchor price first without giving that opportunity to counter party. Remember, Anchoring bias can not be eliminated in our lives or investments but only can be minimised with proper awareness about it.

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