Conservatism bias is a cognitive bias where individuals favor prior beliefs and existing information over new evidence. People experiencing this bias tend to undervalue or dismiss new information that contradicts their established understanding. This can lead to slower revisions of beliefs, even when presented with compelling counter-evidence. New information is often integrated into existing frameworks in a way that minimizes disruption to prior beliefs.
For example, a long-term investor may be reluctant to sell a stock that has significantly declined in value, even after the company's fundamentals have weakened. The investor may overemphasize the stock's past performance and downplay new information suggesting a continued decline, clinging to the hope that the stock will recover to its previous high. This reluctance stems from a preference for the familiar and a resistance to updating their initial assessment of the stock.