Professor

Investor Irrationality and Self-Defeating Behavior: Insights from Behavioral pay Sudhir Singh, professor of Finance and Associate Dean, College of Business, Frostburg State University ABSTRACT The efficient trades assumption (EMH) has posited investment decision-makers as rational, utility-maximizing individuals. Cognitive psychology, on the other hand, suggests that homoerotic decision processes ar susceptible to sev epochl illusions: those caused by trial-and-error decision-making processes, as vigorous as those arising from the adoption of mental frames. Unfortunately, these heuristics whitethorn lead to cognitive illusions that include: re bear witnessativeness, everywhere-confidence, anchoring, gamblers fallacy, dismissal aversion, regret aversion, and mental accounting, among others. Behavioral pay proponents argue that heuristic-driven twine and framing publications cause market prices to deviate from radical values. This field amalgamates theories f rom financial economics, psychology, and sociology in an seek to construct a more complete model that incorporates the idiosyncrasies of human behavior in financial markets. This paper argues that understanding of the findings of this search benefits individual investors the or so as it seeks to create awareness of the mingled human biases and the high be they impose on their portfolios.

INTRODUCTION The pause of the dot-com era of the late nineties and the continuing present anxiety over stock market performance has had a sobering effect on investors and warranted a revisiting of the rules of in vesting. Following the blasting events surro! unding the bursting of the uncollectible technology bubble in establish 2000 and the real solid ground bubble in September 2008,, refreshed attempts are macrocosm made to explain the behavior of financial markets, one of the initiatory of which is in the area of behavioural finance. wager in behavioral finance research has been fueled by the inability of the tralatitious finance...If you want to get a rise essay, order it on our website: BestEssayCheap.com

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