02/05/2020
The third Bias which is Framing Bias.
It is a very simple bias, we tend to judge or make a decision by how the information is presented to us.
Lot of people fall into this trap, by companies showing positive statistics. And thus we think it is a good idea to invest, what we fail to realise is that if the market has risen 20% the case also may be that it has fallen by 40%. And thus we should not make a decision based on how the information is presented but rather find what is the cause for it.
With this is attached another theory which is the Loss Aversion theory, where we tend to be Risk Averse during Gains but Risk taking when sustaining losses.
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