Applying rationale decision making in a financial process would be short cut for good behavioural finance. Let me try to put a small gist of my understanding:
We all humans have a brain which consists of compartment (right, left with a core brain).The side of brains unfortunately have different capabilities, for example left side of brain has limited capability where as right side has almost infinite capacity (99.99% people use left side of brain only!). Each compartment consists of attributes with which we are born, some we develop. These attributes are bad and good both. Say one attributes are the biases we born with, say like over confidence, arrogance, temperament etc. Challenge is while applying these attributes to different aspects in life can be total contradictory. For example what attributes you use during employment are completely upside down when it comes to investing or entrepreneurship. For example buying a cheap product on sale is good only for us, but when it comes a cheap share may become nightmare by falling another 80%.
These biases can be overcome through studies and habit which is ongoing process as we know. Say relegious books provide you nuggets as to how to overcome fear and greed. Or say more samples increases accuracy of analysis (not necessarily true for all cases).These habits and act of practices are also called wiring between core and right/left brain. Wiring to right brain is much more complex as its not an objective compartment.
Take this way:
Core Brain WIRING to Left Side: Analysis, practices, higher sample, in depth studies etc
Core Brain WIRING to Right Side: intuition, gut, unusual habits (like act of doing less, beyond the rules etc).
(different terminologies used for these neural finance like Second system thinking/brain, NLP, R-Mode thinking etc).
These wiring will help you to take a proper decision while buying, adding, holding or selling shares.
Risk tolerance is how much risk you can take against each financial decision. I just wrote a piece on Risk of Ruin under this, classic example of risk tolerance.
Lets continue to debate and discuss on these subjects.