Which of the following are heuristics or cognitive biases about which an adviser should be knowledgeable?

Question

BlackTom AI · Accepted Answer

Let’s break down what the question is asking and review each option in turn to understand how advisers should approach cognitive biases and heuristics.
Option a: The Affect Heuristic. This is a well-known cognitive shortcut where judgments are influenced by emotions rather than objective analysis. Recognizing this helps advisers assess how feelings may color risk, values, or perceived desirability of outcomes, so it is a genuine heuristic advisers should know about.
Option b: Overreaction bias. This label points to tendencies to overreact to information or events, which can distort decision making in financial or strategic advising. Being aware of such a bias helps an adviser temper reactions and check for disproportionate responses.
Option c: Overconfidence bias. This is one of the most studied biases, where the adviser overestimates the accuracy of their own judgments or forecasts. Understanding overconfidence is crucial for risk management, scenario planning, and seeking corroborating evidence before committing to a course of action.
Option d: Anchoring. This refers to the common tendency to rely too heavily on an initial piece of information (the anchor) when making decisions. For advisers, anchoring can affect pricing, valuations, or first impressions, making it essential to identify and adjust for anchors.
Option e: All of the above. If each of the prior options represents a recognized heuristic or bias relevant to advisory work, then acknowledging that all are valid items advisers should know is consistent with a comprehensive understanding of cognitive pitfalls in decision making.
Putting the pieces together, each listed item corresponds to a meaningful cognitive bias or heuristic that can influence judgment, risk assessment, and decision processes in advisory contexts. Recognizing and mitigating these effects supports stronger, more reflective guidance to clients or stakeholders.
In sum, the items cover a range of well-established biases—emotional influence (affect), reaction tendencies (overreaction), confidence calibration (overconfidence), and information framing effects (anchoring)—all of which are central for an adviser to be knowledgeable about. This highlights why the umbrella choice encompassing all of them is emphasized in advisory training and practice.

Which of the following are heuristics or cognitive biases about which an adviser should be knowledgeable?

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