COGNITIVE BIASES: HOW INVESTORS THINKInvestors make costly mistakes due to various cognitive biasesthat affect their decisions.5 Some cognitive biases are built into thebrain and hence subconsciously influence investor behavior. Thesebiases result from either an investor’s inability to analyze all informationor basing decisions on incomplete information. Cognitivebiases can be separated into two broad groups: belief perseverancebiases and information processing biases.6