Overview
Behavioral finance mechanisms provide valuable insights into how psychological factors influence financial decision-making. By understanding cognitive biases, emotional influences, and market anomalies, investors can make more informed choices and avoid common pitfalls. This field combines elements ...
Key Terms
Example: Overconfidence in one's investment choices.
Example: Investors buying stocks because others are doing so.
Example: Stock prices rising despite poor earnings reports.
Example: Selling stocks in a panic during a market downturn.
Example: Basing stock value on its initial purchase price.
Example: Believing one can predict market movements accurately.
Related Topics
Investment Psychology
Explores how psychological factors influence investment decisions.
intermediateMarket Efficiency
Examines the efficiency of markets in reflecting information in asset prices.
advancedRisk Management Strategies
Focuses on techniques to manage financial risk in investments.
intermediateKey Concepts
Cognitive BiasesEmotional InfluencesMarket AnomaliesHerd Behavior