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The somatic marker hypothesis (SMH), formulated by Antonio Damasio, proposes a mechanism by which emotional processes can guide (or bias) behavior, particularly decision-making. [9] [10] Emotions, as defined by Damasio, are changes in both body and brain states in response to different stimuli. [11]
Regret aversion is not only a theoretical economics model, but a cognitive bias occurring as a decision has been made to abstain from regretting an alternative decision. To better preface, regret aversion can be seen through fear by either commission or omission; the prospect of committing to a failure or omitting an opportunity that we seek to ...
Behavioral finance [74] is the study of the influence of psychology on the behavior of investors or financial analysts. It assumes that investors are not always rational , have limits to their self-control and are influenced by their own biases . [ 75 ]
An emotional bias is a distortion in cognition and decision making due to emotional factors. For example, a person might be inclined: to attribute negative judgements to neutral events or objects; [1] [2] to believe something that has a positive emotional effect, that gives a pleasant feeling, even if there is evidence to the contrary;
The Barnewall Two-way Model, also known as the Barnewall Two-way Behavioral Model, is an investor psychographic profiling model. [ 1 ] [ 2 ] The Barnewall Two-way model was initially conceptualized and proposed by Marilyn MacGruder Barnewall in 1987 in an academic paper titled Psychological Characteristics of the individual investor. [ 3 ]
The influence, they note, has been recorded in all the broad individual investor trading activity databases available and has been linked to significant pricing phenomena such as post-earnings announcement drift and momentum at the stock level. In other conditions, for example in the real estate market, disposition effects were also discovered. [5]
Cognitive biases are systematic patterns of deviation from norm and/or rationality in judgment. They are often studied in psychology, sociology and behavioral economics. [1] Although the reality of most of these biases is confirmed by reproducible research, [2] [3] there are often controversies about how to classify these biases or how to ...
Behavioral game theory seeks to examine how people's strategic decision-making behavior is shaped by social preferences, social utility and other psychological factors. [1] Behavioral game theory analyzes interactive strategic decisions and behavior using the methods of game theory , [ 2 ] experimental economics , and experimental psychology .