Search results
Results From The WOW.Com Content Network
When people rely on representativeness to make judgments, they are likely to judge wrongly because the fact that something is more representative does not actually make it more likely. [4] The representativeness heuristic is simply described as assessing similarity of objects and organizing them based around the category prototype (e.g., like ...
Loss aversion was also used to support the status quo bias in 1988, [9] and the equity premium puzzle in 1995. [10] In the 2000s, behavioural finance was an area with frequent application of this theory, [11] [12] including on asset prices and individual stock returns. [13] [14]
Trait ascription bias, the tendency for people to view themselves as relatively variable in terms of personality, behavior, and mood while viewing others as much more predictable. Third-person effect , a tendency to believe that mass-communicated media messages have a greater effect on others than on themselves.
The proponents of the traditional theories believe that "investors should just own the entire market rather than attempting to outperform the market". Behavioral finance has emerged as an alternative to these theories of traditional finance and the behavioral aspects of psychology and sociology are integral catalysts within this field of study ...
Behavioral economists attribute the imperfections in financial markets to a combination of cognitive biases such as overconfidence, overreaction, representative bias, information bias, and various other predictable human errors in reasoning and information processing.
Prospect theory is a theory of behavioral economics, judgment and decision making that was developed by Daniel Kahneman and Amos Tversky in 1979. [1] The theory was cited in the decision to award Kahneman the 2002 Nobel Memorial Prize in Economics .
Researchers have traced the cause of the disposition effect to so-called "prospect theory", which was first identified and named by Daniel Kahneman and Amos Tversky in 1979. [3] Kahneman and Tversky stated that losses generate more emotional feelings which affect individual than the effects of an equivalent amount of gains.
Keynes believed that similar behavior was at work within the stock market. This would have investors pricing shares not based on what they think an asset's fundamental value is, or even on what investors think other investors believe about the asset's value, but on what they think other investors believe is the average opinion about the value ...