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Special Report on

Behavioral-finance / behavioral economics

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Since Princeton psychologist Daniel Kahneman won the 2002 Nobel Prize in economic sciences much attention has been given to studying behavioral finance, behavioral economics, the psychology of investing, and other neurosciences, including neuro-marketing and the new science of irrationality. Though new and often kept hidden as proprietary secrets in the case of quants, it is now clear that Wall Street is using these tools to manipulate and control Main Street investors in subtle and sophisticated ways—structuring fund portfolios, making buy/sell/trade decisions, designing new funds, developing marketing campaigns, training ...
of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market prices , returns and the resource allocation . The fields are primarily concerned with the bounds of rationality (selfishness, self-control) of economic agents . Behavioral models typically integrate insights from psychology with neo-classical economic theory . Behavioral analysts are not only concerned with the effects of market decisions but also with public choice , which describes another source of economic decisions with related biases towards promoting self-interest.
Behavioral Finance in Retirement Planning – Part 1: Are you on the ...
On June 29th Allianz Global Investors announced the creation of a Behavioral Finance Center appointing Professor Shlomo Benartzi as the Chief Behavioral Economist of the Center. The press release claimed that “… the Center is an extension of Allianz Global Investors’ continued commitment to provide financial advisors, investors and plan sponsors with helpful information and resources that enable them to make better financial decisions.” “The Center, providing insight into the intersection of behavioral finance and investing will focus on the following three areas: Behavioral Finance Research and ... market research, surveys and trends
Did behavioral finance get it wrong?
Herbert A Simon got the Nobel Prize for economics in 1978 for his research on decision making process within economic organizations. Herbert is considered one of the most influential social scientist of 20th century. A study of history of behavioral finance also cites his 1955 paper “A behavioral model of rational choice” (1955) as the first thought which started it all. Though the paper starts with the need for a revision of the economic model which assumes that the economic man is rational, has knowledge, computational skills, is well organized with stable system of preferences, can plan alternative courses of action, reach ... market research, surveys and trends


Grasping Reality with Both Hands: April 2009
THE GREAT Credit Crisis has cast into doubt much of what we thought we knew about economics. We thought that monetary policy had tamed the business cycle. We thought that because changes in central-bank policies had delivered low and stable inflation, the volatility of the pre-1985 years had been consigned to the dustbin of history; they had given way to the quaintly dubbed “Great Moderation.” We thought that financial institutions and markets had come to be self-regulating—that investors could be left largely if not wholly to their own devices. Above all we thought that we had learned how to prevent the kind ... industry trends, business articles and survey research
Brain Waves: The field of neurotechnology, the focus of this blog ...
A recent study published in the Journal of Psychological Science and reported in today's Wall Street Journal showed that a group of individuals with brain damage to some of the more sensitive emotional regulatory areas in the brain made more profitable investment decisions than a control group with no known brain damage. Out of the 41 participants, the 15 "brain-damaged" individuals achieved approximately 10% more profitable results than their normal counterparts. The neuroeconomics study conducted by researchers from Carnegie Mellon University, Stanford Graduate School of Business and the University of Iowa, ... industry trends, business articles and survey research
Economists Rethink Theories in Light of Financial Crisis
Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit On top of the devastation it wreaked on markets, jobs and human lives, the global financial crisis has turned the field of economics, and particularly the study of finance, on its head. Nearly three years after the crisis began, business school academics are sifting through the wreckage of long-held theories and developing new ideas. Certainties about the healthy functioning of ... market trends, news research and surveys resources
The Change Equation
Are you as tired of hearing about behavioral finance as I am? Researchers tell us that investors use Stone Age thinking to anchor on a (high) stock price and refuse to sell that (tech) stock until it gets back to its 2000 high. Clients suffer from recency bias, thinking that their portfolio value will fall into negative numbers each time we hit a free fall like 2008. We've learned that the amygdala in the human brain jolts us with pleasure-inducing hormones. They affect us like a cocaine high whenever we gamble and win, and they hook us on gambling with our portfolios. Our brains are better suited to stalking antelopes than ... market trends, news research and surveys resources


What is Behavioral Finance?
behavioral finance, behavioral economics, psychology, and sociology. The uniqueness of behavioral finance is its inte- ... technology research, surveys study and trend statistics
Behavioral Economics: Observations Regarding Issues That Lie Ahead ...
Jun 9, 2010 ... At its core, behavioral economics posits that human beings sometimes act .... the behavioral finance context suggests that CEOs and other ... technology research, surveys study and trend statistics
decision and cognitive sciences, behavioral finance, and experimental economics. His work on the time inconsistency of individuals' decisions ...
  1. profile image ISBMPune Financial Markets Behavioral economics at work and play: You're an expert. What's your take on h... Purely Finance@sam
  2. profile image Pandorabehave Wer sich für Finanzmarktpsychologie / Behavioral Finance / Behavioral Economics interessiert:
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What is Behavioral Finance
Classic economics says that people act so as to best maximize their gains. In other words, they act rationally. This becomes the building blocks of all economic interactions. However, behavioral finance theorists theorize that people do not always act rationally to maximize their own gains. Instead, these people are influenced by their emotions and cognitive biases. In fact, a number of economists - like Daniel Kahneman of Princeton - have even picked up Nobel Prize awards in economics for their groundbreaking research into topics such as prospect theory, loss aversion, and anchoring. Some of these findings are now making their ...