Behavioral Finance Education Platform

Behavioral Finance Lessons

Lesson 1: Loss Aversion

Loss aversion refers to the tendency for people to prefer avoiding losses over acquiring equivalent gains. For example, losing $100 feels more painful than gaining $100 feels pleasurable.

Lesson 2: Overconfidence Bias

Overconfidence bias leads investors to overestimate their knowledge or ability, often resulting in excessive trading or risky investments.

Behavioral Finance Quiz

1. What is loss aversion?

Preferring gains over losses Avoiding losses over gaining equivalent amounts Ignoring losses entirely

2. How does overconfidence bias affect investors?

Leads to cautious investing Causes excessive trading or risk-taking Encourages diversification

Case Study Analysis

Scenario: An investor holds a stock valued at $10,000, which has dropped 20% due to market volatility. They refuse to sell, hoping it will recover to avoid realizing a loss.

Which bias is influencing this decision?

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