B

Glossary · PSX term

Behavioral bias.

A behavioral bias is a systematic thinking error that leads to irrational investment decisions.

Definition

Biases like overconfidence, anchoring, and herding cause investors to act on emotion rather than evidence, often hurting returns. Awareness and rules-based investing can help reduce their impact.

Worked example

Buying on hype and selling in panic are classic outcomes of behavioral biases.

Related on PSX Clarity

Fear of missing out (FOMO)

More glossary terms

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