User:Unyendra
Keywords: Behavioral Finance, Investor Psychology, Emotional, Social Influences
Abstract: This paper provides a brief introduction to behavioral finance. Behavioral finance encompasses research that drops the traditional assumption of expected utility maximization with rational in efficient market. The growth of behavioral finance research has been fueled by the inability of the traditional framework to explain empirical pattern in financial market. Behavioral finance is part of finance that seeks to understand and explain the systematic financial market implication of psychological decision process. It utilizes knowledge of cognitive, social sciences and anthropology. To explain irrational investor’s behavior that is not being captured by the traditional financial model. This paper presents the development of behavioral finance, emotional and social influences. And identifies issues related to Hope, Anticipation, Pride, Fear, Anxiety and Regret. This paper also analyses the time line process of decision making and achieving goals.
INTRODUCTION
From the long time the financial theories is dominated by the traditional financial models. The theories are based on the assumption that investors act rationally and consider all available information in decision making. However, researcher believes that the investment decision of an investors are influenced by the factors like mood state and social behavior mood state can also be defined in positive and negative ways. On positive mood side hope is converted in to anticipation and transform in to pride and on negative side fear converted in to anxiety which finally transform in to regret.
The decision making of people is effected at two levels: The internal and collective. Each individual has its own set of unique and complex psychological and social factors and on the other hand in collective terms, social norm guide the behavior of people of society. And this implies that Much of what the individual learn comes from observing others: