Exec summary of “To avoid bias, hold no coins” by Tony Sheng

This is a summary of To avoid bias, hold no coins by Tony Sheng published on 4 June 2019.

Executive summary

• Investors wanting to sell in a falling market should check if they are influenced by the loss aversion effect (losing $1 hurts more than pleasure from getting $1)
• Investors holding bags should check if they are affected by the endowment effect (the preference towards an existing holding to another holding of the same value)
• Another way to address these biases is to ask yourself “if I was forced to sell everything today, would I rebuy it?”
• Cryptonetworks can benefit from these biases by airdropping assets. Recepients would be likely to hold them due to the endowment effect. Thereafter, the choice-supportive bias would encourage them to focus on the project’s benefits to justify the holding, turning them into true believers