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Are Investors Rational? Lessons From the Late Daniel Kahneman

Many Happy Returns

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Limitations of Human Cognitive Abilities in Decision-Making

The chapter explores how human cognitive abilities can hinder rational decision-making, focusing on the concepts of system one and system two decision making popularized by Daniel Kahneman. It delves into cognitive biases, particularly the overconfidence bias, and discusses the challenges in attributing reasons to market movements. The chapter emphasizes strategies to overcome biases in investment decisions, including journaling, checklists, and decision hygiene.

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