Confirmation Bias and Financial Decisions
We seek information that supports what we already believe.
By Iris Penhaligon | Oct 17, 2026 | 5 min
Confirmation bias is the tendency to favour information that confirms existing beliefs.
It can lead to poor financial decisions.
I Examples
- — Only reading positive news about investments you own
- — Ignoring warning signs
- — Selecting reviews that support a purchase
II Why it matters
It can lead to overconfidence and holding losing positions too long.
III Counter-measures
Seek opposing views and write down what would change your mind.
IV See also
Our overconfidence bias guide.
V In everyday spending
Confirmation bias is not just for investors. When you have already decided to buy something, you may look for reviews that justify the purchase and dismiss negative ones. When choosing a mortgage or insurance, people often stop searching once they find something that fits their expectations. A simple habit is to look actively for reasons not to buy before committing. Asking a friend to argue the other side can also help.
This is general educational information about economics, not financial, investment, or tax advice. Consult a qualified, licensed professional before making financial decisions.
Further reading
- 1. The Availability Heuristic: Why Vivid Events Feel More Likely
- 2. The Framing Effect: Why “90% Survival” Beats “10% Mortality”
- 3. Status Quo Bias: Why We Stick With Defaults