Behavioral finance

An important subfield of finance. Behavioral finances uses insights from the field of pyschology and
applies them to the actions of individuals in trading and other financial applications.

Branch of finance that stresses aspects of investor irrationality.

An important subfield of finance. Behavioral finances uses insights from the field of psychology
and applies them to the actions of individuals in trading and other financial applications.

Behavioural finance is the study of the influence of psychology on the

behaviour of financial practitioners and the subsequent effect on markets.
Sewell (2005)
I think of behavioral finance as simply "open-minded finance".
Thaler (1993
Behavioral finance is a rapidly growing area that deals with the influence of
psychology on the behavior of financial practitioners.
Shefrin (2000)
Behavioral finance is the application of psychology to financial behaviorthe
behavior of practitioners.
Shefrin (2000)
Behavioral finance is the study of how psychology affects financial decision
making and financial markets.
Shefrin (2001)
traditional
1. rational expectations
2. risk averse
3. asset integration
behavioural
1. biased expectations
2. loss averse
3. asset segmentation

Behavioral finance is a study of the markets

that draws on psychology,
Behavioral Finance challenges the rationality wisdom of
traditional finance.