disposition effect

Behavioral Finance: 7 Biases That Cost You Money in 2026

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behavioral finance

Last updated: April 2026 Behavioral finance studies how psychological biases — loss aversion, overconfidence, herd instinct, mental accounting — systematically push investors toward irrational decisions. Founded on Daniel Kahneman and Amos Tversky’s prospect theory (1979) and expanded by Richard Thaler’s work on market anomalies, the field explains why even professionals sell winners too early, hold … Read more

Prospect Theory: 7 Ways Loss Aversion Shapes Your Decisions

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Last updated: March 2026 Prospect theory, developed by Daniel Kahneman and Amos Tversky in 1979, explains why losing $100 hurts roughly twice as much as gaining $100 feels good. The theory describes three core mechanisms that drive irrational decisions: reference-dependent evaluation (gains and losses measured from a starting point, not absolute wealth), loss aversion (losses … Read more