Research of the individuals or group of people

Research Report

Market Rationality

A cognitive
bias refers to the intellectual pattern of deviation from standard or
reasonability in judgement about other individuals and circumstances might be
attracted. Individuals create their own “subjective social reality”
from their impression of the information. It can also be explained as the
movement to settle some decisions and make a move in view of restricted
acquisition and processing of data based on some past experience. Following are
the three cognitive biases that I will be discussing with you that might affect
the actions and decisions of investors. First one is Illusion of control i.e. some events in our life are occurring without
our self-control and are uncontrollable. Second is Worry which means we overthink about some particular thing in our
daily life and we don’t realize that it’s getting worst day by day by overthinking
about one particular thing. Last one is Stereotyping
which means some people describe some of the individuals or group of people
according to their own thinking, point of view of experience (which is not
always correct).


1) Illusion of Control- This is a common strategy in the
face of disappointment, struggle and other uncomfortable feelings. This is
related to overconfidence. Sensible individuals can contrast with respect to in
the case of something is controllable. We all assume that if we are doing
something ourselves, we will do it better whereas we are not always correct.
Investors do think the same but sometimes this may lead to a negative result. According
to the cognitive bias the correspondent events among the circumstances and the
end results is what exactly matters. In this way the higher the likelihood with
which the reason happens, the most grounded the dream should come about.

2) Worry- This is a common characteristic in
a human being. Worry summons recollections and makes dreams of conceivable
future situations that adjust a financial specialist’s judgement about
individual accounts. Tension around venture expands its apparent hazard and
brings down the level of risk tolerance. Investors should compare their risk
level with a proper resource allocation technique.

3) Stereotyping- This means expecting a group or
person to have certain qualities without having real information about the person.
This makes a physical and passionate separation between individuals from
various social gatherings. Organizations that don’t address inner inclination
may likewise confront costly discrimination claims.