Behavioral finance FAQ / Glossary (Attention)

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Dates of related message(s) in the
Behavioral-Finance group (*):
Year/month, d: developed / discussed,
i: incidental

Attention anomaly, bias, disorder,
    limited attention



00/8i - 02/3i + see selective
attention, cognitive overload,

tunnel vision, anchoring, heuristic,
weak signal, overtrading, boredom,
emotion, perception, salience
+ bfdef2

How come I missed it?

We suffer an attention (or attentional) anomaly (or bias) when we do not take
notice
of something crucial
to make a decision.

OK, nearly a platitude, but it might raise the reader's ...attention ;-)

This occasional or, for some people frequent (*), deficiency, is a
blind spot in sensory and mental perception (see that word)

(*) If that flaw is highly repetitive, the person is said to suffer an "attention
disorder"

It is hard to walk and chew gum at the same time
or, more seriously, it is easy to:

Overlook, neglect or misinterpret
   the available information.

This mental myopia might result from a:

Cognitive overload (too heavy newsflow and the unability to
    sort it). 

or habit, anchoring, stereotypes and other heuristics,
    beliefs (see those words)

or just lack of attention, effort or interest.

         Oops, sorry I was thinking or my next holidays!

Focus only on the most apparent
   future outcomes
,

because of tunnel vision.

What is behind such biases?

What can distract or blind the mind?

The causes of attention failures
can be:

Those failures
can be:

Cognitive biases (as seen above)

  Emotions (affect heuristic...) that
divert the attention or makes it selective
(see selective attention)

   Pure habits (autopilot bias).

     Information overload and the
              related stress

   Manipulations (see that word)
              used
to divert somebody's
               attention
(lures, red herrings...).

Occasional,

which leads to a few
investment mistakes
caused by neglecting
information.


Or


Repetitive, verging on
"attention disorders", as
a pathology is called.




Attention and investing


Some studies state that a form of this bias is spreading in today markets.

Investors and fund managers are subject to the same biases than those
cited above.
They tend to get bored and lose interest easily in the assets they
hold (this is the opposite of the "endowment bias" that is common in
other people).

They move to other assets, in fits of hyperactivity 
(see overtrading and also ...boredom).

This is a kind of reverse "divesture aversion".

(*) To find those messages: reach that BF group
      and, once you are there,
      1) click "messages", 2) enter your query in "search archives".

Members of the BF Group, please
 vote on the glossary quality at
BF polls

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This page last update: 23/08/15  

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