This article is the second part of a two-part series on aspects of behavioural biasness that are important in our daily lives as a value investor. If you have not looked at the first article, I strongly encourage you to do so before reading on.
To summarise, the following are the three aspects we have shared with you in the first article:
Power of incentives Denial Consistency and Commitment
Why is having a basic awareness of behavioural biasness so important?
Having the knowledge equips us with the tools to make better decisions. Being conscious of the common psychological pitfalls that we may encounter better prepares us when such situations arise.
Without further ado, we will be introducing three more key points that we believe should be duly noted by all value investors!
Bias from reciprocation
The idea is very simple. When an individual does something for you, you will experience a