Cognitive errors are best explained as errors in __________.
To determine: The cognitive errors
Introduction:
Cognitive error: It is irrational or exaggerated thought process that is expected to perpetuate the consequences of psychopathological states, especially anxiety and depression. These thinking are said to strengthen emotions or negative thoughts.
Answer to Problem 22.1CTF
Cognitive errors are best explained as errors in reasoning.
Explanation of Solution
In behavioral finance, the objective is to understand and explain how reasoning error influence financial decisions. More research is done in behavioral financial areas stems from work in cognitive psychology that studies several aspects of behavior such as financial managers thinking, reasoning, and decision making. When there is error in reasoning, it is known as cognitive errors.
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