A point of view is synonymous to person’s perspective or one’s thought about a certain situation while a bias affects the perspective due to a personal inclination to a choice or opinion.

The Short Answer. Perspective is the point of view that a person sees a historical event from, while bias is when a source is clearly one-sided in its description of the event. Some things to keep in mind: Every source has a perspective, but not every source has clear bias.

: a position or perspective from which something is considered or evaluated : standpoint.

This error in perception may cause us to believe that other people agree with our decisions and actions–even when they don’t. Since people have a tendency to associate with other people with similar opinions and views, we also think those people see things the same way we do.

Biased tendencies can also affect our professional lives. They can influence actions and decisions such as whom we hire or promote, how we interact with persons of a particular group, what advice we consider, and how we conduct performance evaluations.

Cognitive biases can affect your decision-making skills, limit your problem-solving abilities, hamper your career success, damage the reliability of your memories, challenge your ability to respond in crisis situations, increase anxiety and depression, and impair your relationships.

The danger of an overconfidence bias is that it makes one prone to making mistakes in investing. Overconfidence tends to make us less than appropriately cautious in our investment decisions. Many of these mistakes stem from an illusion of knowledge and/or an illusion of control.

Yes, you can have too much of a good thing. For investors, that “thing” can sometimes be confidence. Though it seems counterintuitive, too much confidence can work against investment success, limiting our potential returns in various ways. Overconfidence can give the illusion of control.

Confirmation bias, the tendency to process information by looking for, or interpreting, information that is consistent with one’s existing beliefs. This biased approach to decision making is largely unintentional and often results in ignoring inconsistent information.

Overconfidence is defined as the persistent overevaluation of the own investment decision. Results indicate that overconfidence increases (i) with the absolute deviation from optimal choices, (ii) with task complexity involving the number of risky assets, and (iii) decreases with individual perceived uncertainty.

Research into overconfidence implicates it in impairing judgements across a range of situations including investors’ over-trading behaviour, managers’ poor forecasting, their tendency to introduce risky products, and their tendency to engage in value-destroying mergers.

Overconfidence bias is the tendency for a person to overestimate their abilities. It may lead a person to think they’re a better-than-average driver or an expert investor. Overconfidence bias may lead clients to make risky investments.

Overconfidence can be beneficial to individual self-esteem as well as giving an individual the will to succeed in their desired goal. Just believing in oneself may give one the will to take one’s endeavours further than those who do not.

Behavioral Biases and Their Impact on Investment Decisions

• Overconfidence Bias. Overconfidence is an emotional bias.
• Self-attribution Bias.
• Active Trading.
• Fear of Loss.
• Disposition Effect.
• Framing.
• Mental Accounting.
• Familiarity Bias.

Overconfidence can induce investors to investigate more, and/or to trade more aggressively based on their signals. This sometimes results in greater incorporation of information into price (Hirshleifer, Subrahmanyam, and Titman 1994; Kyle and Wang 1997; Odean 1998; Hirshleifer and Luo 2001).

Behavioural biases are irrational beliefs or behaviours that can unconsciously influence our decision-making process. Emotional biases involve taking action based on our feelings rather than concrete facts, or letting our emotions affect our judgment.

When information is presented in a positive manner, people tend to avoid risk. In investing, framing bias can lead to a lack of understanding about the risk of short-term market movements since headlines tend to focus on the negative, leading investors to fail to adequately process the positives that remain in place.

Behavioral finance seeks an understanding of the impact of personal biases on investors. Common biases include: Overconfidence and illusion of control. In short, it’s an egotistical belief that we’re better than we actually are.

Bias means that a person prefers an idea and possibly does not give equal chance to a different idea. Facts or opinions that do not support the point of view in a biased article would be excluded. For example, an article biased toward riding a motorcycle would show facts about the good gas mileage, fun, and agility.

Behavioral finance helps us understand how financial decisions around things like investments, payments, risk, and personal debt, are greatly influenced by human emotion, biases, and cognitive limitations of the mind in processing and responding to information.

Behavioural Finance seeks to account for this behaviour, and covers the rationality or otherwise of people making financial investment decisions. Understanding Behavioural Finance helps us to avoid emotion-driven speculation leading to losses, and thus devise an appropriate wealth management strategy.

Behavioral finance – the field that combines psychology, economics and other social sciences to identify and understand why people make certain financial choices – can help advisors develop long-term relationships with their clients and build portfolios better suited to their clients.

In finance, herd instinct, or herding behavior, is a phenomenon where investors follow what they perceive other investors are doing, rather than relying on their own analysis. Herd instinct at scale can create asset bubbles or market crashes via panic buying and panic selling.

Human herd behavior can be observed at large-scale demonstrations, riots, strikes, religious gatherings, sports events, and outbreaks of mob violence. When herd behavior sets in, an individual person’s judgment and opinion- forming process shut down as he or she automatically follows the group’s movement and behavior.

Herding is the act of bringing individual animals together into a group (herd), maintaining the group, and moving the group from place to place—or any combination of those. Herding can refer either to the process of animals forming herds in the wild, or to human intervention forming herds for some purpose.

Above all, herding provides safety for the individual. It increases the effective vigilance of the individual, can confuse or intimidate a predator, and can be used to provide cover where none exists. It also makes it less likely for predators to find prey, perhaps limiting the predators’ numbers.

Let’s take a look at some of the miraculous ways animals help us.

• Bees are powerful pollinators.
• Beavers combat climate change.
• Llamas patrol farms.
• Rats detect landmines.
• Squirrels help trees take root.
• Narwhals assist scientists.
• Elephants create a source of water for other species.
• Birds balance nature.

A herd is by definition relatively unstructured. However, there may be two or a few animals which tend to be imitated by the rest of the members of the herd more than others. An animal taking this role is called a “control animal”, since its behaviour will predict that of the herd as a whole.

Traditional pack animals include ungulates such as camels, the domestic yak, reindeer, goats, water buffaloes and llama, and domesticated members of the horse family including horses, donkeys, and mules. Occasionally, dogs can be used to carry small loads.