By Eyal Winter, PhD
December 21, 2017
How does the fear of regret affect our dating behavior?
One of the most well-known biases in financial behavior is called the “disposition effect.” It refers to situations in which investors hold on tight to a losing asset. When we enter into a new investment, whether it be a mutual fund, a specific stock, or even Bitcoin, we will be very reluctant to sell the asset at a loss. We will almost always prefer to hang on to it until it picks up again, almost regardless of the prospects that it will eventually move into profit territory.
A related behavioral bias is the “sunk cost bias.” More...