Tipping Point

It is a behavioural bias where investors tend to get attached to a certain benchmark or number

What is anchoring bias?
 
This is a behavioural bias wherein investors tend to get attached to a certain benchmark or number and allow it to influence their investment decisions overwhelmingly.
 
How does this affect investors’ behaviour?
 
Take the example of a fixed-income investor. Suppose that one-year fixed deposits (FDs) gave 8.5 per cent return some time ago but now offer around 6.5-7 per cent. If an investor is anchored to the 8.5 per cent level, he may not invest at all. Alternatively, he may invest in instruments that have the potential to offer an 8.5