# Behavioral Gap

*Behavioral Finance — Finicade finance glossary*

The behavioural gap is the shortfall between the returns a fund reported and what its investors actually earned, from buying high and selling low.

The behavioural gap is the shortfall between the returns a fund reported and the returns its investors actually earned, caused by buying after gains and selling after losses. Studies consistently place it between one and two percentage points a year. It's the strongest available evidence that in investing, behaviour dominates selection — and the cheapest fix is automation rather than better analysis.

**Also known as:** investor return gap, behaviour gap, dalbar gap

**Related terms:** [Money-Weighted Return](https://finicade.com/glossary/money-weighted-return), [Recency Bias](https://finicade.com/glossary/recency-bias), [Market Timing](https://finicade.com/glossary/market-timing), [Dollar-Cost Averaging](https://finicade.com/glossary/dollar-cost-averaging), [Buy and Hold](https://finicade.com/glossary/buy-and-hold)

Source: https://finicade.com/glossary/behavioral-gap