Overconfidence and recency bias

Judging process by outcome and overweighting the recent past.

Overconfidence and recency bias

| Concept | Explanation | |---|---| | Overconfidence | Overestimating knowledge, forecasting skill, or control. | | Recency bias | Giving excessive weight to recent outcomes. | | Outcome bias | Judging a process only by whether it produced a gain or loss. | | Self-attribution | Crediting skill for gains and blaming circumstances for losses. | | Excess trading | Trading more frequently than the quality of evidence justifies. |

Module knowledge check

  1. What is the disposition effect?
  2. How can anchoring distort valuation?
  3. Why does FOMO intensify after strong price gains?
  4. How does recency bias affect risk perception?

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