Confirmation bias - Free Essay Example

Sample details Pages: 4 Words: 1132 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Confirmation Bias Confirmation (or confirmatory) bias is the tendency to specifically look for or give greater importance to information that is consistent with ones prior beliefs. This sort of selective thinking causes one to ignore or undervalue any alternative thought or belief irrespective of evidence otherwise. An illustration of Confirmation bias- Don’t waste time! Our writers will create an original "Confirmation bias" essay for you Create order A very real manifestation of this tendency can be observed in the virtual world. For instance, investors are increasingly turning to message boards or virtual communities to search, clarify, and exchange information before making investment decisions. The volume of discussion on such portals is so intense that it has become possible to sense stock sentiments from here. These message boards have been shown to provide more accurate and timely information than forecasts by analysts. The reason so many investors even turn to these online communities is to gain an unbiased evaluation of the market conditions, a third-party opinion on something they might not have comprehensive information about, and the 360 degree view of the situation that can help in formulating a successful investment strategy. What in turn happens is that psychological biases, especially in such uncertain and noisy environments, affect the processing of information through these portals leading to short-sighted or impaired decision making. It can be debated that investment-related message boards and communities do not necessarily benefit potential investors by helping them make unbiased and informed decisions, primarily because investors search for specific information on these portals that align with what they already believe. Thus, the investor interprets the information as a confirmation of his earlier beliefs, leading to overconfidence and undue optimism in said strategy and may lead to the investor making rash and irrational decisions. This may ultimately result in lower returns on investment. Group behavior encouraging confirmation biases- A theory suggested by Barber and Odean says that the illusion of control over the outcome of a chance event, the illusion of greater knowledge- assumed to be intuitive or insightful, and self-attribution biases are what cause investors to be exceedingly overconfident against better judgment. In the online world, there is more than enough information to go around. Individuals exhibit very strong opinions about the stocks they are rooting for and backed with substantial data, their opinions create the illusion of all-encompassing knowledge. Excess information is known to cloud judgment and cause investors to give greater weightage to subjective opinions as compared to objective evaluations by a disinterested entity. Specific to online communities, the reason investors consider their peers opinions important is because these communities are formed when like-minded people with similar interests come together for social interactions. Hence investors are inclined to feel a bond towards the rest of the contributors on the forum. Another explanation for this behavior can be based on cognitive dissonance theory, due to which investors try to reduce dissonances between their prior beliefs and the beliefs of the group as they are perceived. As per the cognitive dissonance theory, if any investor observes that the opinion he held before referring to the group, is different from a lot of the ideas shared on the group, he will try to minimize dissonance by deliberately giving greater importance to those opinions that match his beliefs and by over-scrutinizing and eventually discarding any theories otherwise. Overall, it will seem like all the opinions that matter in the group, are exactly in line with what the investor had believed in the first place. This defeats the entire purpose of seeking an objective overview of the situation. Characteristics of confirmation bias and the investors prone to it- Confirmation bias is shown to be proportional to the strength of the investors belief in their chosen stock position. More the investors conviction about his stock position, the greater is the motivation to selectively process widespread information to suit their requirements. These investors eventually get overconfident of their own competence while trading. This has been observed in such instances whereby investors trade frequently and in turn make mistakes often. Overall, they tend to have lower returns on their investments. Investors who are prone to confirmation biases are overly optimistic about their planned future and consequently have higher expectations from their investment performance. This optimism allows them to ignore red herrings and make obvious mistakes in spite of having prior experience. Factors affecting decision-making- Perceived Knowledge- The investor may perceive certain information as sufficient knowledge to aid decision-making. This perceived knowledge may be a lot more than what the investor actually knows. For example the investor may feel like he has insights and data points, which are not too apparent to everyone else, which support his decision to invest in a stock. Hence every nay-sayer who theorizes otherwise can be safely ignored, since the investor believes that he has more information than they do. Someone with low perceived knowledge would never have to confidence to discard another alternate opinion so easily. Trading Experience- It can be safely assumed that inexperience contributes greatly to overconfidence. Someone with years of investment experience will have learnt the hard way about misreading market signals and will have a more realistic view of their own competence in trading. Someone with relatively less experience to go by will tend to get swayed easily by popular opinion and will be more likely to make rash decisions based on perceived knowledge. Thus overconfidence will tend to reduce with age and experience. Investment amount- According to the theory of cognitive dissonance, the magnitude of dissonance increases when the stakes are high i.e. there are personal consequences to the decision being made. If an individual truly believes in a stocks position and invests a huge amount of money in it, then he stands to lose a lot if the decision proves to be a mistake. Knowing this, he will subconsciously ignore any opinions which deride his decision, thus encouraging a strong confirmation bias. Any opinion that supports his decision automatically justifies the extent of his investment. Inference- Investment performance is influenced by the frequency of trading, trading frequency and investment expectations are affected by the individuals confirmation bias, and the extent of confirmation bias is motivated by the strength of the individuals beliefs about a stock. When decision-makers process information, they tend to discount evidences that misalign with their original thought process, while emphasizing the ones that confirm it. The individuals attempt to reduce cognitive dissonance by distorting available information in favor of the alternative they previously chose to contend with. The need for investors to reduce cognitive dissonance between perceived opinions causes confirmation bias among investors while seeking information in discussion groups. They would overestimate their precision with respect to decision making and underestimate any gaps in information, and thus be prone to excessive trading and other investment mistakes.

Effects Of Rock And Classical Music On The Heart Rate Of...

Introduction Knowing how music affects heart rate can allow athletes to choose the correct music to make them more motivated and energized during their training sessions enhancing their performance and improving their competitive results; in addition knowledge of what genre of music could decrease their performance and times is equally important (Roth, 2013). It is important to know if the music has the ability soothe ill patients in hospitals as it may reduce their heart rate to in turn reduce their stress and discomfort levels (Edelson, n.d.). Knowing how music affects heart rate will allow people who suffer from stress, anxiety and/or disorders such as insomnia (abnormal inability to get enough sleep) to slow down their heart rate to relax and go to sleep easier and faster (Barnett, n.d.) The aim of this project is to determine the effects that rock and classical music have on the heart rate of grade 11 girls. Rock music will speed up the heart rate while classical music will slow down the heart rate of grade 11 girls. Literature Review Heading: Source 1 Title of article: Influence of Music on Heart Rate Variability and Comfort – A Consideration through Comparison of Music and Noise Reference: Umemura, M. Honda, K. (1998) Influence of Music on Heart Rate Variability and Comfort – A Consideration through Comparison of Music and Noise. J. Human Ergol. 27 (1, 2). p.30-38 Six university students (5 males and 1 female) between the ages of 21 and 36 yearsShow MoreRelatedAnalysis of the Music Industry30024 Words   |  121 PagesMusic may be defined romantically as `the food of love (Shakespeare) or more prosaically as `sound with particular characteristics (Wikipedia), but it is undeniably a `vibrant artform (Arts Council England) and one which touches more people, in more ways, than any other art form. In commercial terms, music certainly generates a higher market value than the other arts, although a comprehensive market size for music in all its manifestations is impossible to calculate. Key Note has put a valueRead MoreSAT Top 30 Essay Evidence18536 Words   |  75 PagesSacajawea (Mysterious Native American Guide) ....................................................................................... 9 Artists, Authors, and Musicians: Bob Dylan (â€Å"The Prophet of Rock and Roll†) .......................................................................................... 11 Ernest Hemingway (Troubled, brilliant author and war reporter) ............................................................ 13 Frank Lloyd Wright (America’s legendary architect) ...............Read Morepreschool Essay46149 Words   |  185 Pagesdevelopment, cognitive development, and social-emotional development. I believe that these foundations will help guide and support all California preschools in providing developmentally appropriate instruction and activities that engage young minds, hearts, and bodies. Such learning will lead to children’s well-being and success throughout life. JACK O’CONNELL State Superintendent of Public Instruction Acknowledgments T he development of Volume 2 of the California Preschool LearningRead MoreStatement of Purpose23848 Words   |  96 PagesStudies ............................................................................................................ 9 Geography ............................................................................................................................. 11 History................................................................................................................................... 12 Psychology (Clinical--research)...........................................................................Read MoreLangston Hughes Research Paper25309 Words   |  102 Pagesearly age. Langston loved to hold a book and examine the artists illustrations. Through adventures in books, he escaped his lonely, restricted life. Because the school for black children in Topeka was across town, Carrie enrolled Langston in first grade at the all-white Harrison Street School, which was within walking distance of their apartment. At first, the principal refused to admit him, but Carrie took her argument before the Topeka school board and won. Langstons teacher resented having toRead MoreMonsanto: Better Living Through Genetic Engineering96204 Words   |  385 PagesFaucet: Global entrepreneurship in an emerging market C A S E T W O DaimlerChrysler: Corporate governance dynamics in a global company C A S E T H R E E Gunns and the greens: Governance issues in Tasmania C A S E F O U R Succeeding in the Sydney indie music industry C A S E F I V E Nucor in 2005 C A S E S I X News Corp in 2005: Consolidating the DirecTV acquisition C A S E S E V E N Shanghai Volkswagen: Implementing project management in the electrical engineering division C A S E E I G H T TelevisionRead More_x000C_Introduction to Statistics and Data Analysis355457 Words   |  1422 Pagesmaterial from this text or product, submit a request online at http://www.thomsonrights.com. Any additional questions about permissions can be submitted by e-mail to thomsonrights@thomson.com. Printed in the United States of America 1 2 3 4 5 6 7 11 10 09 08 07 ExamView  ® and ExamView Pro  ® are registered trademarks of FSCreations, Inc. Windows is a registered trademark of the Microsoft Corporation used herein under license. Macintosh and Power Macintosh are registered trademarks of Apple ComputerRead MoreLogical Reasoning189930 Words   |  760 Pages.............................................................................. 325 Exercises .......................................................................................................................................... 326 CHAPTER 11 Logical Form and Sentential Logic .................................................................. 334 Logical Equivalence .....................................................................................................................Read MoreMarketing Mistakes and Successes175322 Words   |  702 PagesMANAGEMENT MISTAKES Chapter 11 Chapter 12 Borden: Letting Brands Wither United Way: A Nonprofit Tries to Cope with Image Destruction DaimlerChrysler: A Merger Made in Hades Newell’s Acquisition of Rubbermaid Becomes an Albatross Euro Disney: Bungling a Successful Format Maytag: An Incredible Sales Promotion in England; and Outsourcing Kmart and Sears: A Hedge Fund Manager’s Challenge Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 iii vii 1 9 11 103 127 129 147 Read MoreOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 PagesHistorical Thinking and Other Unnatural Acts: Charting the Future of Teaching the Past Sharon Hartman Strom, Political Woman: Florence Luscomb and the Legacy of Radical Reform Michael Adas, ed., Agricultural and Pastoral Societies in Ancient and Classical History Jack Metzgar, Striking Steel: Solidarity Remembered Janis Appier, Policing Women: The Sexual Politics of Law Enforcement and the LAPD Allen Hunter, ed., Rethinking the Cold War Eric Foner, ed., The New American History. Revised and Expanded

Final Week 9 Cultural Diversity Free Essays

FINAL Cultural Diversity Week 9 Final Currently I live in a community of approximately 21,785 people according to the 2010 US Census. Herriman, which is about 20 miles southwest of Salt Lake City has grown by leaps and bounds over the last twelve years. Herriman was founded as a farming community in 1849 and was incorporated in 1999. We will write a custom essay sample on Final Week 9 Cultural Diversity or any similar topic only for you Order Now Herriman still feels like a small town, an idea which is held onto by its community leaders and population. I noticed while in researching the varying statistics for my city that I look like about 90% of the population. At 38, I am a little bit older than the average age of 27, but I am Caucasian, as are the majority of the residents. I noted with interest, during our last mayoral race, the current mayor spent the time to go out and knock on doors introducing himself to everyone. He made a significant impact on me as he stood and visited with my family and seemed to have the same values and ideals that I do. I cannot say that I have noticed a large difference in how minorities are treated by members of my community. In fact, in my local neighborhood we have a few families of varying ethnicities which have been welcomed and encouraged to teach about their homelands. It has been fascinating to watch and learn about the cultures from which they came and even to try some of the more traditional foods. The text and manuals that we have covered throughout class have covered the varying people that I am like. Caucasians have been notable throughout history and their information is fairly well published. I also noted that coming from an Irish background through several lines, the Irish were well represented. I did note a lack of other European descendants being listed through the text; I have a very strong relation to the Danish culture and did not find any information in regards to that culture in our texts at all. The local media looks much like the state, which is to say white, with a few people of color thrown in. It shouldn’t be made light of; it just feels that after everything has been so serious in discussion that lightening up the conversation cannot hurt. I have noticed as I have gotten older that we have gained a larger population of various minorities and they have begun to change the way that we see things as well as the way that we are being represented. I feel that this is a great step forward. I have noticed the biggest difference between me and most of the people in local leadership is that they are male while I am female. There is a definite lack of female leadership in our government here. Within the last ten years female leadership has increased, yet still has not changed dramatically. I have noticed that more women are running for various offices throughout the state and feel confident that this will change the local governments as well. As our minority population has grown, there have also been changes in the state government in regards to representation becoming more diverse. I feel this helps represent their interests in the community, and again feel that as people move and spread out in the local communities this will affect the local governments as well. While I do not feel that I can do a lot to change various inequities, I feel that by volunteering my time to the youth in my area I will help set them up into be more able to make changes in the future. It appears that in speaking with friends they note the same various situations that I have mentioned. Yet, because I live in a neighborhood where the majority of people are married and the wives are homemakers, I do bring a different perspective into conversations. Speaking with a local neighbor and friend, who was a former elementary school teacher, she noted that she feels that our culture is fairly self-contained due to our religious affiliations and yet she is one of the most outgoing individuals that I have met. She indicated that there is a trend to assume that people are just like you and not take the time to get to know anyone else. I have noted her on long walks through the neighborhood stopping to talk to anyone that happened to be outside and visit. Something that we both agreed on was the way that the community is very friendly and welcoming to people. It really starts with the neighborhood and then extends out into our city. A prime example of this was the â€Å"UP† house that a local builder wanted to build. He wanted to build a home that was a replica of the home in Disney’s â€Å"UP†. After contacting Disney and going through varying channels, Disney agreed to the home as long as they were allowed certain stipulations, he went looking for a community to build the home. He had contacted several cities, and Herriman agreed to allow him to build the home. The neighborhood had a HOA which agreed, despite it being colors not normally permitted, and a style different from the area, they would permit him to build and allow it into the HOA coding. However, the builder’s stipulation was that, when sold, the new homeowners had to agree to keep the colors. The home was built and each and every detail was matched to the specifications of the Disney standard, they went so far as to design the interior with the same furniture, which had to be created to replicate it. Herriman and the community welcomed this builder in during the annual â€Å"Parade of Homes† in order to make them feel more comfortable. Finally, the home was sold to a couple that wanted to move back to Utah after several years in California and the home remains the pastel coloring of the Disney design. Herriman leaders felt that having the home built in Herriman was an economic boost they were unable to turn down, and afterwards gave an honor to Bangerter Homes in recognition of such. This type of innovative government thinking is definitely in line with how any community I live in should function. I want my community leaders to always be looking at the next best source to bring economic development closer to home. Not only does this benefit the city, but it benefits me because the city has more to offer. Growing up, I lived in a more diverse area of the Salt Lake Valley and was exposed to varying cultures and ethnicities which helped me gain a firm understanding of treating people with respect, and with dealing with varying races. However, the governments there were more old fashioned and less adaptable to today’s changing environment’s. I feel as if this community was actually less welcoming than the one that I am currently in because of this. The prior community may have had a more diverse community, but welcoming new and local businesses was not something that the government chose to promote. Living in Herriman, I have noticed that many of the government officials as well as other leaders are active in getting out and being a part of the community and ensuring that we are aware as citizens of anything that might affect us; from the opening of a new restaurant, to a fire that is burning out of control. Herriman city officials have a local Facebook account and Twitter feeds that are used to help notify their citizens on a regular basis of varying volunteer activities, emergencies, CPR training classes and more. It is another way that the community in which I live is actively trying to encourage its citizens to be part of it; this reflects my views on how a community should interact. I believe that in being part of a community, you want to be involved; you want to support local business and taking advantage of times that you can volunteer to help. For instance, going out to reseed a mountain after a grass fire helps build community relations. I enjoy living where I do and feel that I have found a mostly perfect fit for my family. People take care of their yards, their homes, they are active and want to do things to improve not only themselves, but the community in which we live. All of these are ideals that coincide with how I feel a community should be. References: http://www. city-data. com/city/Herriman-Utah. html#top www. herrimancity. org http://www. sltrib. com/sltrib/news/53012557-78/hamblin-lynette-disney-herriman. html. csp http://www. facebook. com/HerrimanCity http://twitter. com/BeReadyHerriman How to cite Final Week 9 Cultural Diversity, Papers