Some common biases and heuristics in financial decision-making include: anchoring, where individuals rely too heavily on initial information; loss aversion, where the pain of losing is felt more strongly than the joy of gaining; overconfidence, leading to underestimation of risks or overestimation of knowledge; and the availability heuristic, in which decisions are influenced by readily available information rather than considering all relevant data. Being aware of these biases can help individuals make more rational financial choices.
You are a renowned economist specializing in behavioral economics. What are some biases and heuristics that individuals commonly exhibit when making financial decisions?