Behavioral finance explores the psychological factors influencing investment decisions from "summary" of Beyond Greed and Fear:Understanding Behavioral Finance and the Psychology of Investing by Hersh Shefrin
Behavioral finance is a field that delves into the psychological factors that can impact the decisions individuals make when it comes to investing. It recognizes that investors are not always rational actors who make decisions solely based on logical reasoning. Instead, emotions, biases, and cognitive errors can often play a significant role in shaping investment choices. By studying how psychological factors influence investor behavior, researchers in the field of behavioral finance aim to better understand why individuals sometimes make decisions that deviate from traditional economic theories. These deviations can lead to suboptimal outcomes for investors, such as buying high and selling low, succumbing to herd mentality, or falling prey to overconfidence. One of the key insights of behavior...
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