Behavioral finance shows that people do not always act rationally in financial markets from "summary" of The Little Book of Behavioral Investing by James Montier
Behavioral finance is the study of how individuals make financial decisions. It shows that people do not always act rationally in financial markets. This concept challenges the traditional economic theory of rational behavior. Instead, it recognizes that emotions and psychological biases can influence decision-making. One of the key findings of behavioral finance is that individuals often make decisions based on emotions rather than logic. This can lead to irrational behavior, such as buying high and selling low. For example, investors may panic and sell their investments during a market downturn, even though this goes aga...
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