Cognitive biases are systematic patterns of deviation from norm or rationality in judgment, often in uncertain situations. In the realm of finance, understanding these cognitive biases is crucial, as they can significantly impact investment decisions. This article explores the various cognitive biases that influence financial decision-making, their implications, and strategies to mitigate their effects. 1. Overconfidence Bias Overconfidence bias refers to the tendency of individuals to overestimate their knowledge and abilities, leading them to take excessive risks or make overly optimistic financial decisions. This bias can result in overtrading, underestimating risks, and overestimating potential returns. Example: John, an individual investor,…