Behavioural

Finance

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FINDING BFIN
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MOVIE

AlkA RAjPAl
2021007
The act of downplaying, denying, or minimizing the significance of
opposing evidence and logical reasoning is known as self-deception.
Persuading oneself that something is real (or incorrect) while concealing
one's self-knowledge of the falsehood is a form of self-deception. The basis
of self-deception appears to be the mind's ability to inhibit consciousness in
order to lessen concern.
When we realize that we are lying to ourselves, we may recognize it. Our
words and feelings will be dramatically at odds with one another, we will
cease asking others for advice on our problems, our actions won't line up
with our statements.
We dismiss and twist the truth to feel more relaxed, particularly when
reality threatens our self-interest.
In the movie Boiler Room, this bias is depicted in the scene where Harry
saw how Farrow Tech's stock were down by 5% and still when he called
Seth for selling the stocks, he got convinced for buying more stocks of the
same company. He invested his life savings in the same stock and when his
wife confronted him on how he can do this, he stayed in denial and was
actually trying to convince his wife that the prices will shoot and he will
get great returns out of this stock even when he himself was not really
sure of it and had played the biggest bet of his life by trusting a stranger
and ignoring how the stock was already down by 5 points. He later loses
his entire money when the stock crashed by 83%.
This is a classic example of how a person can stay in denial and be deceive
oneself!
Foot-in-the-door(FITD) technique is a compliance tactic that aims at getting a person to agree
to a large request by having them agree to a modest request first.
This can be seen in the scene where Seth first asked Harry to buy only 100 shares to see for
himself how he will get greater returns and then made him buy the same stocks worth 50k dollars
later.
Bias from Deprival Syndrome along with the FITD is observed when Chris convinced the
doctor to buy the stock by making him realize that if he doesn’t buy it then other doctors will
buy it and he will be deprived of the huge profits that this company will make, which ultimately
made the doctor buy the shares and actually made him interested in buying more number of
shares than offered.