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  • (Fama, 2014) - (Thaler, 1999)

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    Rifat Ibna Lokman
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    Behavioral finance is a relatively new field that examines how human psychology and biases impact financial decision-making. It challenges the assumption of market efficiency in traditional finance. Behavioral finance draws from cognitive psychology and uses experimental methods to study how individuals, groups, organizations, and markets make financial choices. Key topics studied include risk perception, loss aversion, overconfidence, and how emotions can drive irrational behavior in markets. The field evolved from early work in the 17th-18th centuries on behavioral economics and gambling, but grew substantially after 1990 with many studies challenging efficient market hypotheses.

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    Behavioral finance is a relatively new field that examines how human psychology and biases impact financial decision-making. It challenges the assumption of market efficiency in traditional finance. Behavioral finance draws from cognitive psychology and uses experimental methods to study how individuals, groups, organizations, and markets make financial choices. Key topics studied include risk perception, loss aversion, overconfidence, and how emotions can drive irrational behavior in markets. The field evolved from early work in the 17th-18th centuries on behavioral economics and gambling, but grew substantially after 1990 with many studies challenging efficient market hypotheses.

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    4 visualizzazioni6 pagine

    (Fama, 2014) - (Thaler, 1999)

    Caricato da

    Rifat Ibna Lokman
    Behavioral finance is a relatively new field that examines how human psychology and biases impact financial decision-making. It challenges the assumption of market efficiency in traditional finance. Behavioral finance draws from cognitive psychology and uses experimental methods to study how individuals, groups, organizations, and markets make financial choices. Key topics studied include risk perception, loss aversion, overconfidence, and how emotions can drive irrational behavior in markets. The field evolved from early work in the 17th-18th centuries on behavioral economics and gambling, but grew substantially after 1990 with many studies challenging efficient market hypotheses.

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    di 6

    INTRODUCTION

     A new issue for research since 1990


     mostly depend on the personal perspective of a researcher

    behavioral finance is a body of literature mostly preoccupied with attacks on market


    efficiency (Fama, 2014).

    open-minded finance. (Thaler, 1999)


    BEHAVIORAL FINANCE DECIOSN MAKERS

    The Individual The Group An Organization The market


    An Individual A group of investors An investment firm The stock market
    Investor
    A financial planner Board of directors A non-profit The bond market
    organization
    A Board member An investment club A corporation An international
    market
    A Graduate A college finance A student The futures market
    club organization
    (Richardi & Simon, 2000)
    Topics to Discuss on Behavioral Finance
     Financial Psychology  Risk Perception
     Cognitive Dissonance  Behavioral Economics
     Fear
     Gender Bias
     Overconfidence
     Contrarian Investing
     Preferences Regret Theory
     Loss Aversion  Prospect Theory
     Greed Anomalies  Behavioral Economics
     Market Inefficiency  Panics Affect (Emotions)
     Fads Overreaction
     Cognitive Psychology
     Mental Accounting
     Under reaction Framing  Heuristics
     Irrational Behavior
    EVOLUATION OF BEHAVIORAL FINANCE

    17TH to 18th century


    Up to 1990
    From 1990 till present

    Behavioral
    Economics Traditional and
    Modern Finance Behavioral
    Finance
    BEHAVIORAL ECONOMIES

    • Blaise Pascal’s idea


    17th • gambles could be constructed to show that the rational solution is
    clearly shows different result with the real-life observations.
    Century • people make decisions not only on the basis of expected value, but
    also based on their expected utility. (Bernoulli, 1954)

    18th
    • Research regarding behavioral economics were less in this period
    Century- and the economists were more focused on core economic subjects
    mid of 19th other than psychological aspects. This period is called ‘Quest for
    psychology-free economics’.
    century
    Evolutionary process of finance theory (Pimenta & , 2014)

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