A common observation that science makes about irrational investor behavior - heuristics and distortions that people use when assessing new information - is the so-called status quo bias.

He is also to be regarded as a direct consequence of the loss aversion. This is the human tendency to hold on to the current state. The motives for this are clear: The disadvantages that could arise from a possible change are often perceived by most people as greater than the possible benefits.

This behavior can be observed again and again with investors. After all, humans do not act as homo economicus, ie free from emotions and cognitive limitations. On the contrary, investors are also holding onto poorly performing stocks for far too long due to the status quo bias.


Part 1 of the series:

The biggest mistakes of investors, Part 1: Why investors often deceive themselves

Part 2 of the series:

The biggest investor error, Part 2: The cause of control and illusion

Part 3 of the series:

The biggest investor mistakes, Part 3: Driven by your own self-esteem

Part 4 of the series:

The Biggest Mistakes, Part 4: Why the Order of Information Matters

Part 5 of the series:

The biggest investor error, Part 5: The Tunnelblick

Part 6 of the series:

The biggest investor error, Part 6: The perception trap