Critically discuss how the knowledge of investor biases and heuristics can be used to successfully invest money and provide some examples.

Cognitive biases and heuristics can be an impediment to sound investments. At the same time, the knowledge about systematic investor mistakes can help strategists to identify anomalies in the market and act upon them.
Critically discuss how the knowledge of investor biases and heuristics can be used to successfully invest money and provide some examples.
Advice and Guidance (applies to question 2 only):
• Your answer should not exceed 1,500 words.
• You should consider the concepts you were introduced to across the MN3138 module and focus on market anomalies, heuristics, and overconfidence in financial decision-making.
• Please be structured and precise in your answers. Choose 2-3 concepts and explain which investment ideas can be drawn from them. For example, you might want to discuss behavioural aspects of value investing, momentum investing etc. Try to keep the general remarks (e.g., on what Behavioural Finance is) to the minimum.
• There is plenty of information online concerning examples of innovative investment organisations that exploit insights from Behavioural Finance; you can draw upon these materials in your analysis. You will receive additional marks for discussing practical examples.
• You must address the question asked and not try to re-define it. Not answering the question
will result in a significant loss of marks.
• Your own thinking and evaluation should be apparent in the discussion of the topic.
• It is expected that you will consult academic and professional journals (next to textbooks).
Journals provide you with the newest insights and ideas from the field.
• The answer must be correctly referenced. You might want to choose the Harvard citation
style (http://www.citethisforme.com/harvard-referencing).
• Answer for question 2 must be typed, so that it can be
checked for plagiarism. Hand-written answers for question 2 will receive a mark of zero.