Market Psychology & Behavioural Finance

The tendency to credit successes to one's own skill and failures to external circumstances.

Test: favourable outcomes are attributed internally and unfavourable ones externally, regardless of the actual process quality qualitative

The tendency to treat the actions of others as evidence about what is correct.

Test: the strength of a belief rises with the number of people observed holding it, independent of any new evidence qualitative

Market Psychology & Behavioural Finance

The preference for leaving things as they are, treating inaction as safer than action.

Test: the current arrangement is retained even when an alternative would be chosen if the positions were reversed qualitative

Market Psychology & Behavioural Finance

Continuing with a course of action because of resources already committed, rather than because of expected future returns.

Test: the decision to continue references money, time or effort already spent, which cannot be recovered by continuing qualitative

Market Psychology & Behavioural Finance

Drawing conclusions from a sample that includes only the entities that survived, omitting those that failed.

Test: the dataset excludes delisted, merged or closed entities, so the surviving sample's average overstates the true population average %