Development of an AI-Powered Engine for Behavioral Bias Detection in Investment Advisory
Keywords:
Behavioral Finance, AI in Investment Advisory, Bias Detection, Overconfidence Bias, Anchoring, NLP in FinanceAbstract
Investment advisors often fall prey to behavioral biases that negatively impact financial decision-making. This study proposes and develops an AI-powered engine to detect behavioral biases—such as overconfidence, anchoring, and loss aversion—based on advisors’ communications and portfolio decisions. Using machine learning models trained on historical advisory and market performance data, the engine flags bias-consistent patterns and provides corrective feedback. Our preliminary results indicate strong predictive validity and real-time detection capacity. This innovation holds promise for improving advisory outcomes and ensuring regulatory compliance.
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