Name: Unggayan, Joanarhel F.

Year and Section: BSBA FM 3-10s

Subject: Behavioral Finance Date: July 15, 2022

TEST YOURSELF CHAPTER 9

I. Identification

1. Reflective
2. Qualified Default Investment Alternative (QDIA)
3. Overcoming their own biases when it comes to saving and investing
4. Reflexive
5. Auto-escalation

II. Essay

1. Do you have other ideas and strategies on how behavioral finance could be overcome?
I believe that the key to overcome behavioral finance issues especially biases is simply
critical thinking and efficiently managing our mindset when it comes to making financial
decisions or investments. Too much reliance to ones’ self or towards others’ own experiences
and decisions isn’t really helpful, which is why it’s always important that we weigh things first
and always choose what maximizes the value of our investment. Blindly following market
trends or hype is not advisable as we should keep track of our decisions making sure that they
are carefully thought out. Other strategies can also work such as deciding just how much it
would have to go down or up before we sell our chosen investments. This way we can keep
ourselves from holding on too long if it won’t be successful or get too regretful if we sell
investments when it rises.

2. Which among the discussed strategies of overcoming behavioral finance you think could best
address the very nature of Filipinos as investors?
There’s definitely a number of strategies included in the module that best address the
biases or issues of Filipino investors. The strategy about understanding biases is indeed one
of them, as I think that Filipino investors (although not all), are not fully aware of their own
biases perhaps due to lack of background or knowledge about behavioral finance. From my
perception, most of Filipino market players gets easily drawn by investments that are too good
to be true and gets the hype with social media. This was the case especially among
cryptocurrencies and I think that this may be because most Filipinos want to alleviate their
status in life by choosing an easier way of getting a chance in winning investments. This kind
of behavior is highly influenced by biases such us optimism or herd.
Other than that, diversifying assets is a good strategy as well since it can help avoid severe
losses when the investments fail. Choosing to invest in markets with opposite trends such as
stocks and bonds will be good so that even if the trend from the first market falls, it can still
recover from other investments.