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How to Conquer Top 25 Financial Biases

Center for BrainHealth

New book co-authored by Center for BrainHealth DALLAS January 15, 2020 - People can be remarkably irrational in the complex setting of financial markets. This can lead to catastrophic mistakes costing millions of dollars, according to a new book co-authored by Dr. Daniel Krawczyk, deputy director of Center for BrainHealth and Francis Chair professor in Behavioral and Brain Sciences at The University of Texas at Dallas, and George H. Baxter, CEO and portfolio manager at Sabrepoint Capital Management. Based on cognitive brain science, including published research from Center for BrainHealth, Understanding Behavioral BIA$: A Guide to Improving Financial Decision-Making identifies the 25 financial biases most relevant to investing, which typically result from a limited understanding about how to leverage our attention, memory and knowledge. The authors describe recently discovered evidence of how biases develop and offer practical strategies to help investors implement personal and institutional best practices that guard against biases’ harmful effects.
Tips included in the strategies to conquer investing biases include:
  • Rules-Based Investment Process
  • Active Management
  • Awareness of Uncertainty and Error
  • Group Decision Making
  • Idea Generation Process
  • Techniques for Analysis
  • Playbook for Constant Improvement
“The science is clear: our brains are adaptable and trainable. In practical terms, this means that once we identify biases and understand them, we can learn to protect our brains against these biases and adopt strategies that strengthen our performance rather than hinder it,” said Krawczyk. ABOUT THE CENTER FOR BRAINHEALTH® The Center for BrainHealth, part of The University of Texas at Dallas, is a research institute committed to enhancing, preserving and restoring brain health across the lifespan. Scientific exploration at the Center for BrainHealth is leading edge, improving lives today and translating groundbreaking discoveries into practical clinical application. By delivering science-based innovations that enhance how people think, work and live, the Center and its Brain Performance Institute™ are empowering people of all ages to unlock their brain potential. Major research areas include the use of functional and structural neuroimaging techniques to better understand the neurobiology supporting cognition and emotion in health and disease.

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