Behavioral finance FAQ / Glossary (Debiasing)
This is a separate page of the D section of the Glossary
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Year/month, d: developed / discussed,
01/08i,10i,12i - 03/5i
+ see rebiasing, tilting, image
Straightening the skews
and tightening the screws.
Debiasing is finding and eliminating some of
our mental biases that affect decision making and behavior.
Yes, the blunder-making bugs.
See the glossary articles about "bias" to identify the usual mental and
behavioral ones to be ...debugged.
A kind of analysis and correction process as a "personal hygiene" for deciders.
Debiasing in finance
Loose money screws.
Find them and fix them
Debiasing helps investors, borrowers, traders
to improve their rationality and efficiency.
The process is:
To identify the two levels (collective and personal) of mental /
behavioral flaws, as mentioned below.
You guessed it: the information in this site can help do the job!
To do one's best to avoid or to correct those biases (although not too
easy to change habits!)
Logically, to make it followed by some "rebiasing" (see that word) in
order to adapt our decisions to the biases that affect the bulk of other
The two level of biases
Debiasing / Rebiasing
1) Personal level
Observing our own cognitive
or emotional biases (see
bias) that distort our own
decision making process.
Avoiding correcting or
compensating our biases.
Admitting also the inability
to avoid all of them fully and
Perfection does not exist
in this world.
2) General level.
(herding...) that bring
anomalies in market
price levels, returns
Taking advantage of
It might be profitable to
mimic consciously some
investor biases (see some
methods in the "tilting"
Our valuation method based on the stock image coefficient (see "image")
is an attempt at debiasing / rebiasing the stock prices that the stock market
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