Naive investing

4 important questions on Naive investing

"Econs do not have trouble investing, humans can easily become flummoxed". Is this statement true?

Yes

What is meant with; Humans are risk averse

Humans hate losses about twice as much as they like gains

What is the diversification heuristic?

When in in doubt diversify, do not put all your eggs in one basket
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What are 5 ways to nudge for people to make better choices?

1. Defaults
2. Structuring Complex choices (for participants who want to be somewhat more involved would be offered ac house among a small set of balanced or lifecycle funds
3. Expect error
4. Mappings and feedback (e.g. Show a small apartment for low outcome retirement investments and big houses with pools for high outcome retirement investments
5. Incentives (e.g. Laws that help require firms to act in the best interest of the employees).

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