Behavioural Finance

Regret Aversion

Definition

What is Regret Aversion?

Avoiding decisions to reduce the possibility of future regret.

Example in practice

An investor keeps cash indefinitely to avoid regretting a market loss.

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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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