This article explains the concept of behavioral finance. It also explains why behavioral finance is the real driving force behind the actions of the investors in the financial markets. It also explains why studying behavioral finance is important.
Articles on Behavioral Finance
This article explains the concept of heuristics. It explains how heuristics affect investment decision making. It also explains how investors can use heuristics to their advantage.
This article explains the advantages of behavioral finance. It explains how investors who follow behavioral finance actually ahave an edge over other investors when it comes to financial decision making and long term investment behavior.
This article explains the flaws which are inherent in behavioral finance psychology. It lists some of the prominent flaws and also explains the way in which these flaws can be avoided while making decisions.
This article provides some basic FAQs about behavioral finance. It tries to clear the misconceptions of the reader before they begin reading up on advanced concepts related to behavioral finance.
This article explains the concept of prospect theory. It explains how the prospect theory is different as compared to its predecessor theories. It also explains how irrational human behavior can be explained with the help of the prospect theory.
This article explains the concept of risk aversion. It also explains how investors lose money because they are psychologically averse to accepting losses.
This article explains the concept of sunk cost fallacy. It also explains how this fallacy affects the behavior of individual investors. Lastly, it also provides guidelines that can be followed in order to avoid the sunk cost fallacy.
This article explains the concept of the endowment effect. It also explains how the endowment effect negatively impacts the portfolio of investors. Tips to avoid the endowment effect have also been mentioned in the article.
This article explains the concept of regret aversion. It also explains how regret aversion is different as compared to loss aversion. The effects of regret aversion as well as the steps which need to be taken to overcome it has been listed in this article.
This article explains the meaning of self-control bias. It explains what the bias is, how it manifests in our investment decisions, and what strategies need to be adopted in order to overcome the bias.
This article explains the concept of anchoring bias. It also explains how the anchoring bias affects decisions about a person's investments. Finally, the tips to avoid anchoring bias have also been explained in this article.
This article explains the concept of confirmation bias. It explains how confirmation bias leads to investors making wrong decisions. It also explains how a person can avoid confirmation bias in their thought process.
This article explains the concept of herd-mentality. It explores the roots of the herd mentality. It also explains how the herd mentality wrecks havoc in the market and how it can be avoided.
This article explains the concept of mental accounting. It lists several examples that illustrate the mental accounting bias. Then, it also explains how this mental accounting can have an adverse impact on the decision-making process followed by investors.
This article explains the concept of recency bias. It also explains how recency bias can cause harm to an investor's portfolio. It also explains the steps that can be taken in order to avoid recency bias.
This article explains the concept of overconfidence bias. It explains the different types of overconfidence bias. It also lists the common investment mistakes made as a result of overconfidence bias.
This article explains the concept of conservatism bias. It also explains the root cause of conservatism bias and the steps that need to be taken in order to avoid the bias.
This article explains the concept of framing bias. It explains how framing bias impacts our decision making, and it also explains what the steps that need to be taken to get rid of the framing bias are.
This article explains the concept of behavioral finance theory. It explains how behavioral finance theory is different from traditional finance theory. It also mentions the advantages of following the behavioral finance theory.
This article explains the concept of hindsight bias. It explains what the bias is and how it affects investment decision making. It also provides information about how certain cognitive techniques can be used to avoid hindsight bias.
This article explains the concept of the illusion of control. It also explains why some investors are more prone to having this belief. Lastly, it also explains the consequences of this bias and how they can be avoided.
This article explains the concept of status quo bias. It also explains why the status quo bias is difficult to manage. Lastly, it explains the possible losses that may arise because of status quo bias as well as how to manage them.
This article explains the concept of sample size neglect. It also explains how sample size neglect affects the decisions made by investors. Lastly, it explains some of the other fallacies related to sample size neglect.
This article explains the concept of optimism bias. It also explains how optimism bias affects investment decisions. Lastly, it also explains how optimism bias can be avoided.
This article explains the concept of cognitive dissonance bias. The two defining aspects of cognitive dissonance bias have been discussed in this article. The impact of cognitive dissonance bias as well as how it can be avoided have also been discussed.
This article explains what home country bias is. It also lists the negative effects of home country bias that investors have to face. Lastly, it explains how knowledge can be used to overcome this bias.
This article explains the concept of availability bias. It explains how incidents of a certain type are more prone to create an availability bias. It also explains how the availability bias impacts investors and how it can be avoided.
This article explains the concept of blind spot bias in investment decisions. It explains how blind side bias is very difficult to avoid. The characteristics of blindside bias as well as the steps that need to be taken in order to avoid the bias have been written in this article in detail.
This article explains the concept of narrative fallacy. It explains what a narrative is and then goes on to explain what the narrative fallacy is. It then provides information about the impact of the narrative fallacy as well as the techniques that can be used to avoid the narrative fallacy.
This article explains the concept of the planning fallacy. It explains why this fallacy occurs and how it impacts investor behavior. The steps that need to be taken in order to avoid this fallacy have also been detailed in this article.
This article explains the concept of base rate neglect. It also explains what the different types of information are and how they can cause a base rate neglect. Lastly, the article also explains the impact of this fallacy as well as how it should be avoided in the long run.
This article explains the concept of contrarian investing. It also explains how contrarian investing works. Some of the known pitfalls of contrarian investing have also been explained in this article.
This article explains the concept of cultural influences on investment decision making. It explains the various aspects of investment decisions on which culture has an impact.
This article explains the concept of behavioral life cycle theory. It explains how this theory has been formulated by including three important biases into the standard life cycle theory. The relationship between the two theories has also been discussed in detail.
This article explains the concept of psychographic profiling. It explains how psychographic profiling is useful in behavioral finance. It also explains the Barnewall two way model, which is the oldest psychographic model.
This article explains the concept of the Bielard, Biel, and Kaiser model i.e., the BBK model. It explains how this psychographic model divides investors into various categories. The characteristics of each of these five categories have been listed in this article.
This article explains the three-dimensional psychographic model used in investment markets. It explains the details of each dimension. It also explains how investors can be clubbed into eight personality types using this model. The shortcomings of the model have also been mentioned in this article.
This article explains the various categories of investor biases. It explains how some biases are similar to one another and also how these groups of biases are often found in investors with similar thought processes. The various categories have been listed and explained for the convenience of the reader.
This article explains the top five lessons which have been learned by studying behavioral finance. It also explains how these lessons need to be applied in day to day life in order to improve investment performance.
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