Description
Book SynopsisPeople tend to be penny wise and pound foolish and cry over spilt milk, even though we are taught to do neither. Focusing on the present at the expense of the future and basing decisions on lost value are two mistakes common to decision-making that are particularly costly in the world of finance. People are also tempted to throw good money after bad. Behavioral finance is the field that sheds light on how people make decisions and make predictable mistakes due to mental and emotional characteristics. It also provides insights into how markets operate. Having a better understanding of both can mitigate mistakes.Behavioral Finance: What Everyone Needs to Know provides an overview of common shortcuts and mistakes people make in managing their finances that can affect their wealth. An extensive discussion sets forth the cognitive biases or errors in thinking that occur when people are collecting, processing, and interpreting information. Emotional biases that can create distortions in cogn
Trade ReviewIf you are looking for a book that explains behavioral finance in plain understandable language, then this book is for you. This book adeptly applies the classic Socratic method to explain why the behavioral approach better explains the behavior of normal people than the neoclassical approach. * Hersh Shefrin, Mario L. Belotti Professor of Finance, Santa Clara University *
Table of ContentsChapter 1. Foundations and Psychological Concepts Chapter 2. Cognitive Biases Chapter 3. Emotional Biases and Social/Cultural Influences Chapter 4. Investor Behavior Chapter 5. Nudge: The Influence of Frame Dependence Chapter 6. Cognitive Ability Notes Index
