Behavioural Finance

Narrative Bias

Definition

What is Narrative Bias?

Preferring a compelling story over less exciting but more relevant evidence.

Example in practice

A grand technology vision distracts investors from weak cash flow.

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The tendency to feel losses more strongly than equivalent gains.

The tendency to overestimate one's knowledge, forecasting ability, or control.

The tendency to seek or interpret information that supports an existing belief.

Incorporating environmental, social, and governance factors into investment analysis or ownership.

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