John R. Nofsinger

“Mental shortcuts, also called heuristic simplifications, help us analyze situations and make decisions quickly in our daily life. However, this process often leads us astray when analyzing decisions with risk and uncertainty. Because investing decisions involve substantial risk and uncertainty, our decisions are biased in predictable ways. The representativeness bias causes us to extrapolate the past and assume that good companies are good investments. The familiarity bias causes us to believe that firms we are familiar with are better investments than unfamiliar firms. Thus, we own more local firms and our employer’s stock and few international stocks. Thus, these biases lead to low diversification and higher risks.”
― John R Nofsinger, The Psychology of Investing

“The DRD4 gene has variations called alleles that differ in the number of times a segment of the gene repeats itself. The most common versions are either the 4-repeat allele, which is carried by approximately three-quarters of the population, or the 7-repeat (or more) allele. The presence of the higher-repeating alleles (7 or more) has been shown to be related to reduced sensitivity to dopamine. A reduced sensitivity to dopamine requires relatively more stimulation to provoke the same internal reward. People with at least one allele of 7-repeats or longer are more likely to engage in novelty-seeking or compulsive gambling.”
― John R Nofsinger, The Psychology of Investing