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Re: Categorisation of errors, biases, heuristics, etc

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  • pgreenfinch
    Oops, I wanted to say * Cognitive vs. emotional biases * Individual vs. collective biases ... finds ... heuristics, ... according ... simple?
    Message 1 of 8 , Dec 10, 2007
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      Oops, I wanted to say
      * Cognitive vs. emotional biases
      * Individual vs. collective biases

      --- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
      <pgreenfinch@...> wrote:
      >
      > Good question, and some biases are close to one another.
      > Also, some bias definitions might be ...biased ;-)
      >
      > Well, I think one way to make a first broad categorization
      > is to differentiate:
      >
      > * Cognitive vs. emotional biases (a difference that is
      > of course not always fully clearcut)
      >
      > * Individual vs. cognitive biases
      >
      > As I did in:
      > http://pagesperso-orange.fr/pgreenfinch/bfdef.htm
      >
      > Peter
      >
      > --- In Behavioral-Finance@yahoogroups.com, "peter.wuethrich"
      > <peter.wuethrich@> wrote:
      > >
      > > When wading through behavioral (finance) literature, one easily
      finds
      > > 100+ biases.
      > >
      > > Michael Pompian* notes: "Some authors refer to biases as
      heuristics,
      > > while other scholars classify biases along cognitive or emotional
      > > lines."
      > >
      > > Does anyone have another idea on how to categorise biases
      according
      > to
      > > some kind of meaningful framework to make things a bit more
      simple?
      > >
      > > Thanks and regards,
      > > Peter
      > >
      > > *Michael M. Pompian, Behavioral Wealth Management, Wiley, 2006
      > >
      >
    • 姚京
      An interesting question. I think that a good way is to categorise biases into belief biases, that lead to errors in judgments of probability, and preference
      Message 2 of 8 , Dec 10, 2007
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        An interesting question.

        I think that a good way is to categorise biases into
        belief biases, that lead to errors in judgments of
        probability, and preference biases, that result in
        errors in judgments of outcome (see, e.g., Barberis
        and Thaler (2003)). I also think that emotional bias
        is a subcategory of cognitive bias.


        Regards,

        Jing


        Barberis, N. & Thaler, R. Constantinides, G.; Harris,
        M. & Stulz, R. M. (ed.) A survey of behavioral finance
        18 Handbook of the Economics of Finance, Elsevier
        Science B. V., 2003, 1051-1121

        --- pgreenfinch <pgreenfinch@...>写道:

        > Good question, and some biases are close to one
        > another.
        > Also, some bias definitions might be ...biased ;-)
        >
        > Well, I think one way to make a first broad
        > categorization
        > is to differentiate:
        >
        > * Cognitive vs. emotional biases (a difference that
        > is
        > of course not always fully clearcut)
        >
        > * Individual vs. cognitive biases
        >
        > As I did in:
        > http://pagesperso-orange.fr/pgreenfinch/bfdef.htm
        >
        > Peter
        >
        > --- In Behavioral-Finance@yahoogroups.com,
        > "peter.wuethrich"
        > <peter.wuethrich@...> wrote:
        > >
        > > When wading through behavioral (finance)
        > literature, one easily finds
        > > 100+ biases.
        > >
        > > Michael Pompian* notes: "Some authors refer to
        > biases as heuristics,
        > > while other scholars classify biases along
        > cognitive or emotional
        > > lines."
        > >
        > > Does anyone have another idea on how to categorise
        > biases according
        > to
        > > some kind of meaningful framework to make things a
        > bit more simple?
        > >
        > > Thanks and regards,
        > > Peter
        > >
        > > *Michael M. Pompian, Behavioral Wealth Management,
        > Wiley, 2006
        > >
        >
        >
        >


        姚京


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      • leif_ericssen
        I think that the early focus on heuristic bias and finance was certainly useful but was also limiting. If a heuristic is a rule of thumb and/or perceptual
        Message 3 of 8 , Dec 10, 2007
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          I think that the early focus on heuristic bias and finance was
          certainly useful but was also limiting. If a heuristic is a rule of
          thumb and/or perceptual tool (the 2 features are usually paired) then I
          think it is a good idea to focus on the role of context and social
          influence. I think that would be be most useful in developing a
          taxonomy. I know that in real decisions I pay attention to mental
          models and heuristics and how they develop and function along with
          cultural background and institutions.

          Jan

          --- In Behavioral-Finance@yahoogroups.com, "peter.wuethrich"
          <peter.wuethrich@...> wrote:
          >
          > When wading through behavioral (finance) literature, one easily finds
          > 100+ biases.
          >
          > Michael Pompian* notes: "Some authors refer to biases as heuristics,
          > while other scholars classify biases along cognitive or emotional
          > lines."
          >
          > Does anyone have another idea on how to categorise biases according
          to
          > some kind of meaningful framework to make things a bit more simple?
          >
          > Thanks and regards,
          > Peter
          >
          > *Michael M. Pompian, Behavioral Wealth Management, Wiley, 2006
          >
        • Martin Sewell
          ... The following taxonomy is derived from page 17 of Introduction - Heristics and Biases: Then and Now written by Thomas Gilovich and Dale Griffin in the
          Message 4 of 8 , Dec 10, 2007
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            peter.wuethrich wrote:
            > When wading through behavioral (finance) literature, one easily finds
            > 100+ biases.
            >
            > Michael Pompian* notes: "Some authors refer to biases as heuristics,
            > while other scholars classify biases along cognitive or emotional
            > lines."
            >
            > Does anyone have another idea on how to categorise biases according to
            > some kind of meaningful framework to make things a bit more simple?

            The following taxonomy is derived from page 17 of "Introduction -
            Heristics and Biases: Then and Now" written by Thomas Gilovich and Dale
            Griffin in the book "Heuristics and Biases: The Psychology of Intuitive
            Judgment" edited by Thomas Gilovich, Dale Griffin and Daniel Kahneman, 2002.

            General purpose heuristics:
            Affect
            Availability
            Causality
            Fluency
            Similarity
            Surprise

            Special purpose heuristics:
            Attribution Substitution
            Outrage
            Prototype
            Recognition
            Choosing by Liking
            Choosing by Default

            Old (now superseded) heuristics:
            Representativeness (replaced by attribution-substitution (prototype
            heuristic and similarity heuristic))
            Anchoring and Adjustment (replaced by the affect heuristic)

            Martin
          • peter.wuethrich
            Thank you Jan, Jing, Martin and Peter! Very helpful. I just found another taxonomy in a german dissertation*. The author separates them into the areas of the
            Message 5 of 8 , Dec 11, 2007
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              Thank you Jan, Jing, Martin and Peter! Very helpful.

              I just found another taxonomy in a german dissertation*. The author
              separates them into the areas of the decision making process where they
              might happen the most: Information preception, processing, evaluation
              and taking action.

              Regards,
              Peter

              *Lena Mazanek, Der Einfluss von Emotionen auf das individuelle
              Entscheidungsverhalten privater Anleger, Dissertation Uni Duesseldorf,
              2006
            • 姚京
              Good. I think that (over-)optimism is a bias in information preception and overconfidence is a bias in information evaluation. Regards, Jing ...
              Message 6 of 8 , Dec 12, 2007
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                Good.
                I think that (over-)optimism is a bias in information
                preception and overconfidence is a bias in information
                evaluation.

                Regards,
                Jing

                --- "peter.wuethrich" <peter.wuethrich@...>写道:

                > Thank you Jan, Jing, Martin and Peter! Very helpful.
                >
                > I just found another taxonomy in a german
                > dissertation*. The author
                > separates them into the areas of the decision making
                > process where they
                > might happen the most: Information preception,
                > processing, evaluation
                > and taking action.
                >
                > Regards,
                > Peter
                >
                > *Lena Mazanek, Der Einfluss von Emotionen auf das
                > individuelle
                > Entscheidungsverhalten privater Anleger,
                > Dissertation Uni Duesseldorf,
                > 2006
                >
                >



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