Conclude with an analysis of how the management methods of emotional, belief preservation and information processing biases are similar and how they differ.
(NOTE: Please kindly notice that the assignment is related MBA Finance course–check the textbook of “Behavioral finance and wealth management: how to build optimal portfolios: that account for investor biases” (2nd edition)).
Your papers for this course should include substantial academic research beyond the textbook. Select academic papers addressing the topic for their contributions and findings. Simply reiterating the textbook is not meeting the expectations for these written assignments.
Answer preview
Information processing bias is a cognitive bias that manifests as a predisposition to process information irrationally when making financial decisions. It often indicates a deficit in vigilance when processing vital financial information, and this situation results in low-quality financial decisions (Loerwald & Stemmann, 2016). Information bias shares some common features with emotional bias. First, both concepts entail a convenient deviation from the traditional understanding of finance and factoring in one’s attitudes or beliefs. In emotional bias, the individual lets attitudes towards certain investments or actions take precedence over real evidence. Similarly, information processing bias manifests in skewing one’s perceptions towards information, and one may favor recent actions over realistic approaches that call for a more extensive examination of the market. Second, both biases may demonstrate an emphasis
