CFA CFA Level 3 Behav Finance – confused with Difference bw Anchoring and Adjustment and Conservatism

Behav Finance – confused with Difference bw Anchoring and Adjustment and Conservatism

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    • adossa3
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      Hi,

      Difference bw Anchoring and Adjustment and Conservatism

      Anchoring and Adjustment – is sticking to original forecast – gtg attached to it. O/wtg old info and U/wtg new info and its an Information Processing Bias.
      In a case in exam, will a certain number be given to distinguish bw the two biases. ‘Impact’ example would be: believing current mkt downfall will continue

      Conservatism – Maintaining prior views by failing to incorporate new info. Its a Belief Perseverance Bias.
      Unconsciously O/wtg original forecasts and U/wtg new info – ‘Impact’ example: holding on too long to an investment that has poor outlook (isnt this the same as Anchoring ??)

      Thanks a lot for your comments !

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