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A Changing Dyna-WPS Office

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0% found this document useful (0 votes)
11 views3 pages

A Changing Dyna-WPS Office

Change

Uploaded by

leoton770
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TABLE OF CONTENTS

 What Is Behavioral Finance?

 Understanding Behavioral Finance

 Behavioral Finance Concepts

 Biases Studied

 The Stock Market

What Is Behavioral Finance?

Behavioral finance, a sub-field of behavioral economics, proposes that psychological

influences and biases affect the financial behaviors of investors and financial

practitioners. Moreover, influences and biases can be the source for explanation of all

types of market anomalies and specifically market anomalies in the stock market, such

as severe rises or falls in stock price.

Understanding Behavioral Finance

Behavioral finance can be analyzed from a variety of perspectives. Stock market returns

are one area of finance where psychological behaviors are often assumed to influence

market outcomes and returns but there are also many different angles for observation.
The purpose of classification of behavioral finance is to help understand why people

make certain financial choices and how those choices can affect markets. Within

behavioral finance, it is assumed that financial participants are not perfectly rational and

self-controlled but rather psychologically influential with somewhat normal and selfcontrolling
tendencies.

One of the key aspects of behavioral finance studies is the influence of biases. Biases

can occur for a variety of reasons. Biases can usually be classified into one of five key

concepts. Understanding and classifying different types of behavioral finance biases

can be very important when narrowing in on the study or analysis of industry or sector

outcomes and results.

KEY TAKEAWAYS

 Behavioral finance is an area of study focused on how psychological influences

can affect market outcomes.

 Behavioral finance can be analyzed to understand different outcomes across a

variety of sectors and industries.

 One of the key aspects of behavioral finance studies is the influence of


psychological biases.

Behavioral Finance Concepts

Behavioral finance typically encompasses five main concepts:

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