How do emotional biases differ from cognitive biases according to the chapter?

Emotional biases stem from subjective feelings and intuition, while cognitive biases arise from errors in information processing or logical reasoning. Emotional biases can lead to irrational financial behaviors, such as holding onto losing stocks due to fear, whereas cognitive biases are based on heuristics that often result in suboptimal decisions.

Emotional biases are deeply rooted in an investor's psychological state and can influence decision-making through feelings and impulses. In contrast, cognitive biases are linked to the mental shortcuts or heuristics that individuals use when processing information, which can lead to systematic errors in judgment. For example, cognitive biases might include overconfidence or confirmation bias, while emotional biases could manifest as excessive optimism or fear of loss.