The Behavioral Biases of Individuals

Belief perseverance

• Conservatism Slow to update on new info.
• Confirmation Seek info that confirms existing belief.
• Representativeness Stereotypes, base-rate neglect.
• Illusion of control Overestimate ability to influence outcomes.
• Hindsight "I knew it all along" — overconfidence in retrospective accuracy.

Information processing

• Anchoring Stick to initial reference (e.g. purchase price).
• Mental accounting Treat money differently based on source/intended use.
• Framing Decisions change based on how options are presented.
• Availability Rely on easily recalled examples.

• Loss aversion Pain of loss > pleasure of equivalent gain.
• Overconfidence Overestimate own ability.
• Self-control Inability to delay gratification.
• Status quo Bias toward current state.
• Endowment Value something more once owned.
• Regret aversion Avoid actions that may cause regret.

Cognitive errors can typically be corrected with education and structured decision processes (checklists, rules). Emotional biases are harder to overcome — typically the manager adapts to rather than corrects them, especially with private wealth clients.