FEATURED IN: BURSAMKTPLC, 6 AUG. 2016
Behavioral finance has shown us that humans are irrational in making decision. In many occasions when we face complex or uncertainty situations, we tend to use mental shortcut such as common sense, rule of thumb, stereotyping or intuitive to make decision. This comes to our mind automatically and effortlessly, and it is a fast-thinking form of cognitive decision-making, System 1. In psychology, we call it heuristic.
System 2 is the conscious part of brain. We are often engaging it for challenging problems where calculation and deliberation is required. A good example is like at what value of share price only we shall buy it? …
