Cognitive Errors Affecting Investment Decisions of High-Net-Worth Individuals

In the context of portfolio management and wealth planning, behavioral finance plays a crucial role in understanding investor behavior and decision-making processes. One common area of focus in behavioral finance is cognitive errors, which are systematic biases that can impact investors' beliefs and actions.

Suppose you are a financial advisor tasked with designing an investment strategy for a group of high-net-worth individuals who have recently exhibited signs of irrational decision-making stemming from cognitive errors. These investors have shown tendencies toward overconfidence, loss aversion, and framing effects.

Your task is to identify at least three specific cognitive errors that these investors may be experiencing. For each cognitive error, explain how it could affect their investment decisions and performance. Additionally, provide strategies that you would implement to mitigate these errors and enhance their overall portfolio outcomes.