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Behavioral economics and behavioral finance are closely related fields which apply scientific research on human and social cognitive and emotional biases to better understand economic decisions and how they affect market prices, returns and the allocation of resources. For an article about the conceptual problems of the mind see Cognitive closure (philosophy. An economy is the realized social system of production exchange distribution and consumption of goods and services of a country or other area Decision making can be regarded as an outcome of mental processes ( cognitive process) leading to the selection of a course of action among several alternatives Market price is an economic concept with commonplace familiarity it is the price that a good or service is offered at or will fetch in the marketplace it is of interest mainly in the The P/E ratio ( price-to-earnings ratio) of a Stock (also called its "earnings multiple" or simply "multiple" "P/E" or "PE" The fields are primarily concerned with the rationality, or lack thereof, of economic agents. Rationality as a term is related to the idea of Reason, a word which following Webster's may be derived as much from older terms referring to Homo economicus, or Economic man, is the concept in some Economic theories of man (that is a Human) as a rational, perfectly informed and Behavioral models typically integrate insights from psychology with neo-classical economic theory. In behaviorial science System theory and Dynamic systems modeling a behavioral model reproduces the required behavior of the original analyzed System, Psychology (from Greek grc ψῡχή psȳkhē, "breath life soul" and grc -λογία -logia) is an Academic and Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets

Academics are divided between considering Behavioral Finance as supporting some tools of technical analysis by explaining market trends, and considering some aspects of technical analysis as behavioral biases (representativeness heuristic, self fulfilling prophecy). Technical analysis is a Financial markets technique that claims the ability to forecast the future direction of security prices through the study of past market The representativeness heuristic is a Heuristic wherein commonality between objects of similar appearance is assumed [1]

Behavioral analysts are mostly concerned with the effects of market decisions, but also those of public choice, another source of economic decisions with some similar biases. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information Public choice in economic theory is the use of modern Economic tools to study problems that are traditionally in the province of Political science.

Contents

History

During the classical period, economics had a close link with psychology. Classical economics is widely regarded as the first modern school of economic thought. For example, Adam Smith wrote The Theory of Moral Sentiments, an important text describing psychological principles of individual behavior; and Jeremy Bentham wrote extensively on the psychological underpinnings of utility. Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. The Theory of Moral Sentiments was written by Adam Smith in 1759 Jeremy Bentham ( IPA: or) (15 February 1748&ndash6 June 1832 was an English Jurist, Philosopher, and legal and Social reformer In Economics, utility is a measure of the relative satisfaction from or desirability of Consumption of various Goods and services. Economists began to distance themselves from psychology during the development of neo-classical economics as they sought to reshape the discipline as a natural science, with explanations of economic behavior deduced from assumptions about the nature of economic agents. In Science, the term natural science refers to a naturalistic approach to the study of the Universe, which is understood as obeying rules or law of The concept of homo economicus was developed, and the psychology of this entity was fundamentally rational. Homo economicus, or Economic man, is the concept in some Economic theories of man (that is a Human) as a rational, perfectly informed and Nevertheless, psychological explanations continued to inform the analysis of many important figures in the development of neo-classical economics such as Francis Edgeworth, Vilfredo Pareto, Irving Fisher and John Maynard Keynes. Francis Ysidro Edgeworth (8 February 1845 &ndash 13 February 1926 made significant contributions to the methods of statistics during the 1880s Vilfredo Federico Damaso Pareto (vil'fredo pa'reto July 15, 1848 – August 19, 1923) or Fritz Wilfried Pareto, was an Italian Irving Fisher ( February 27 1867 Saugerties, New York &ndash April 29 1947, New York was an American economist John Maynard Keynes 1st Baron Keynes CB (ˈkeɪnz "cains" (5 June 1883 &ndash 21 April 1946 was a British Economist whose ideas

Psychology had largely disappeared from economic discussions by the mid 20th century. A number of factors contributed to the resurgence of its use and the development of behavioral economics. Expected utility and discounted utility models began to gain wide acceptance, generating testable hypotheses about decision making under uncertainty and intertemporal consumption respectively. In Economics, Game theory, and Decision theory the expected utility theorem or expected utility hypothesis predicts that the "betting preferences" Discounted utility is an Economics term in which economists accountants underwriters and other financial analysts include the future discounted value of a good A hypothesis (from Greek) consists either of a suggested explanation for a phenomenon (an event that is observable or of a reasoned proposal suggesting a possible Uncertainty is a term used in subtly different ways in a number of fields including Philosophy, Statistics, Economics, Finance, Insurance Economic theories of intertemporal consumption seek to explain people's Preferences in relation to consumption and Saving over the course of their life Soon a number of observed and repeatable anomalies challenged those hypotheses. Furthermore, during the 1960s cognitive psychology began to describe the brain as an information processing device (in contrast to behaviorist models). Cognitive psychology is a branch of Psychology that investigates internal mental processes such as problem solving memory and language Behaviorism or Behaviourism, also called the learning perspective (where any physical action is a behavior is a philosophy of Psychology based on the Psychologists in this field such as Ward Edwards,[2] Amos Tversky and Daniel Kahneman began to compare their cognitive models of decision making under risk and uncertainty to economic models of rational behavior. Amos Nathan Tversky, PhD (עמוס טברסקי March 16, 1937 - June 2, 1996) was a cognitive and mathematical psychologist Daniel Kahneman (דניאל כהנמן (born 5 March 1934 is an Israeli American psychologist and Nobel laureate, notable for his work on In Mathematical psychology, there is a longstanding interest in the transitivity of preference and what kind of measurement scale utility constitutes (Luce, 2000). Mathematical psychology is an approach to psychological research that is based on Mathematical modeling of perceptual cognitive and motor processes and on the establishment Robert Duncan Luce (born May 16 1925 is the Distinguished Research Professor of Cognitive Science at the University of California Irvine. [3]

An important paper in the development of the behavioral finance and economics fields was written by Kahneman and Tversky in 1979. This paper, 'Prospect theory: Decision Making Under Risk', used cognitive psychological techniques to explain a number of documented divergences of economic decision making from neo-classical theory. Prospect theory is a theory that describes decisions between alternatives that involve Risk, i Over time many other psychological effects have been incorporated into behavioral finance, such as overconfidence and the effects of limited attention. Further milestones in the development of the field include a well attended and diverse conference at the University of Chicago,[4] a special 1997 edition of the Quarterly Journal of Economics ('In Memory of Amos Tversky') devoted to the topic of behavioral economics and the award of the Nobel prize to Daniel Kahneman in 2002 "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty". The Nobel Memorial Prize in Economic Sciences, officially named The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (Sveriges riksbanks pris i ekonomisk [5]

Prospect theory is an example of generalized expected utility theory. The Expected utility model developed by John von Neumann and Oskar Morgenstern dominated decision theory from its formulation in 1944 until the late 1970s Although not commonly included in discussions of the field of behavioral economics, generalized expected utility theory is similarly motivated by concerns about the descriptive inaccuracy of expected utility theory. In Economics, Game theory, and Decision theory the expected utility theorem or expected utility hypothesis predicts that the "betting preferences"

Behavioral economics has also been applied to problems of intertemporal choice. The most prominent idea is that of hyperbolic discounting, proposed by George Ainslie (1975), in which a high rate of discount is used between the present and the near future, and a lower rate between the near future and the far future. In Behavioral economics, hyperbolic discounting refers to the Empirical finding that people generally prefer smaller sooner payoffs to larger later payoffs when This pattern of discounting is dynamically inconsistent (or time-inconsistent), and therefore inconsistent with some models of rational choice, since the rate of discount between time t and t+1 will be low at time t-1, when t is the near future, but high at time t when t is the present and time t+1 the near future. As part of the discussion of hypberbolic discounting, has been animal and human work on Melioration theory and Matching Law of Richard Herrnstein. Melioration Theory posits that organisms are sensitive to differences in the local rates of Reinforcement: number of reinforcements obtained at an alternative event divided by In Operant conditioning, the matching law is a quantitative relationship that holds between the relative rates of response and the relative rates of reinforcement Richard J Herrnstein ( May 20 1930 – September 13 1994) was a prominent American researcher in animal They suggest that behavior is not based on expected utility rather it is based on previous reinforcement experience. In Operant conditioning, reinforcement is an immediate increase in the strength of a response following a change in environment

Methodology

At the outset behavioral economics and finance theories were developed almost exclusively from experimental observations and survey responses, though in more recent times real world data has taken a more prominent position. fMRI has also been used to determine which areas of the brain are active during various steps of economic decision making. Functional MRI or functional Magnetic Resonance Imaging (fMRI is a type of specialized MRI scan Experiments simulating market situations such as stock market trading and auctions are seen as particularly useful as they can be used to isolate the effect of a particular bias upon behavior; observed market behavior can typically be explained in a number of ways, carefully designed experiments can help narrow the range of plausible explanations. A stock market, or (equity market is a private or public market for the trading of company Stock and derivatives of company "Auctioneer" redirects here For the DC Comics supervillain see Auctioneer (comics. Experiments are designed to be incentive compatible, with binding transactions involving real money the norm.

Key observations

There are three main themes in behavioral finance and economics:[6]

Recently, Barberis, Shleifer, and Vishny (1998),[7] as well as Daniel, Hirshleifer, and Subrahmanyam (1998) have built models based on extrapolation (seeing patterns in random sequences) and overconfidence to explain security market over- and underreactions, though such models have not been used in the money management industry. These models assume that errors or biases are correlated across agents so that they do not cancel out in aggregate. This would be the case if a large fraction of agents look at the same signal (such as the advice of an analyst) or have a common bias.

More generally, cognitive biases may also have strong anomalous effects in aggregate if there is a social contamination with a strong emotional content (collective greed or fear), leading to more widespread phenomena such as herding and groupthink. Herd behaviour describes how individuals in a group can act together without planned direction Groupthink is a type of thought exhibited by group members who try to minimize conflict and reach consensus without critically testing analyzing and evaluating ideas Behavioral finance and economics rests as much on social psychology within large groups as on individual psychology. Social psychology is the study of how people and groups interact However, some behavioral models explicitly demonstrate that a small but significant anomalous group can also have market-wide effects (eg. Fehr and Schmidt, 1999).

Behavioral finance topics

Some central issues in behavioral finance are why investors and managers (and also lenders and borrowers) make systematic errors. It shows how those errors affect prices and returns (creating market inefficiencies). It shows also what managers of firms or other institutions, as well as other financial players might do to take advantage of market inefficiencies.

Among the inefficiencies described by behavioral finance, underreactions or overreactions to information are often cited, as causes of market trends and in extreme cases of bubbles and crashes). In Investing, Financial markets are commonly believed to have market trends that can be classified as primary trends secondary trends (short-term and secular trends Such misreactions have been attributed to limited investor attention, overconfidence / overoptimism, and mimicry (herding instinct) and noise trading. Herd behaviour describes how individuals in a group can act together without planned direction

Other key observations made in behavioral finance literature include the lack of symmetry between decisions to acquire or keep resources, called colloquially the "bird in the bush" paradox, and the strong loss aversion or regret attached to any decision where some emotionally valued resources (e. In Prospect theory, loss aversion refers to the tendency for people strongly to prefer avoiding losses than acquiring gains g. a home) might be totally lost. Loss aversion appears to manifest itself in investor behavior as an unwillingness to sell shares or other equity, if doing so would force the trader to realise a nominal loss (Genesove & Mayer, 2001). It may also help explain why housing market prices do not adjust downwards to market clearing levels during periods of low demand.

Applying a version of prospect theory, Benartzi and Thaler (1995) claim to have solved the equity premium puzzle, something conventional finance models have been unable to do. Prospect theory is a theory that describes decisions between alternatives that involve Risk, i The equity premium puzzle is a term coined by economists Rajnish Mehra and Edward C

Presently, some researchers in experimental finance use experimental method, e. The goals of experimental finance are to establish different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics g. creating an artificial market by some kind of simulation software to study people's decision-making process and behavior in financial markets.

Behavioral finance models

Some financial models used in money management and asset valuation use behavioral finance parameters, for example:

One characteristic of overreaction is that the average return of asset prices following a series of announcements of good news is lower than the average return following a series of bad announcements. Information as a concept has a diversity of meanings from everyday usage to technical settings In Investing, Financial markets are commonly believed to have market trends that can be classified as primary trends secondary trends (short-term and secular trends In other words, overreaction occurs if the market reacts too strongly or for too long (persistent trend) to news that it subsequently needs to be compensated in the opposite direction. As a result, assets that were winners in the past should not be seen as an indication to invest in as their risk adjusted returns in the future are relatively low compared to stocks that were defined as losers in the past.

Criticisms of behavioral finance

Critics of behavioral finance, such as Eugene Fama, typically support the efficient market theory (though Fama may have reversed his position in recent years). Eugene F "Gene" Fama (born February 14, 1939) is an American economist known for his work on Portfolio theory and Asset pricing They contend that behavioral finance is more a collection of anomalies than a true branch of finance and that these anomalies will eventually be priced out of the market or explained by appealing to market microstructure arguments. The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated Market Microstructure is a branch of finance concerned with the details of how exchange occurs in Markets. However, a distinction should be noted between individual biases and social biases; the former can be averaged out by the market, while the other can create feedback loops that drive the market further and further from the equilibrium of the "fair price". Feedback is a circular causal Process whereby some proportion of a system's output is returned (fed back to the Input. Fair value, also called fair price, is a concept used in Finance and Economics, defined as a rational and unbiased Estimate of the potential

A specific example of this criticism is found in some attempted explanations of the equity premium puzzle. The equity premium puzzle is a term coined by economists Rajnish Mehra and Edward C It is argued that the puzzle simply arises due to entry barriers (both practical and psychological) which have traditionally impeded entry by individuals into the stock market, and that returns between stocks and bonds should stabilize as electronic resources open up the stock market to a greater number of traders (See Freeman, 2004 for a review). In Economics and especially in the theory of Competition, barriers to entry are obstacles in the path of a firm which wants to enter a given Market In reply, others contend that most personal investment funds are managed through superannuation funds, so the effect of these putative barriers to entry would be minimal. In addition, professional investors and fund managers seem to hold more bonds than one would expect given return differentials.

Quantitative behavioral finance

Quantitative behavioral finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Quantitative behavioral finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been lead by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich,[8] Vladimira Ilieva, Ahmet Duran,[9] Huseyin Merdan). Gunduz Caginalp is an American mathematician currently a professor at the University of Pittsburgh. The Journal of Behavioral Finance is a peer-reviewed journal that publishes research related to the field of Behavioral finance. Vernon Lomax Smith (born January 1, 1927) is professor of Economics at Chapman University School of Law and School of Business in Orange Studies by Jeff Madura,[10] Ray Sturm[11] and others have demonstrated significant behavioral effects in stocks and exchange traded funds.

The research can be grouped into the following areas:

  1. Empirical studies that demonstrate significant deviations from classical theories
  2. Modeling using the concepts of behavioral effects together with the non-classical assumption of the finiteness of assets
  3. Forecasting based on these methods
  4. Studies of experimental asset markets and use of models to forecast experiments

Behavioral economics topics

Models in behavioral economics are typically addressed to a particular observed market anomaly and modify standard neo-classical models by describing decision makers as using heuristics and being affected by framing effects. heuristic (hyu̇-ˈris-tik is a method to help solve a problem commonly an informal method In general, economics sits within the neoclassical framework, though the standard assumption of rational behaviour is often challenged. Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets

Heuristics

Prospect theory - Loss aversion - Status quo bias - Gambler's fallacy - Self-serving bias - money illusion

Framing

Cognitive framing - Mental accounting - Anchoring

Anomalies (economic behavior)

Disposition effect - endowment effect - inequity aversion - reciprocity - intertemporal consumption - present-biased preferences - momentum investing - Greed and fear - Herd instinct - Sunk cost fallacy

Anomalies (market prices and returns)

equity premium puzzle - Efficiency wage hypothesis - price stickiness - limits to arbitrage - dividend puzzle - fat tails - calendar effect

Critical conclusions of behavioral economics

Critics of behavioral economics typically stress the rationality of economic agents (see Myagkov and Plott (1997) amongst others). Prospect theory is a theory that describes decisions between alternatives that involve Risk, i In Prospect theory, loss aversion refers to the tendency for people strongly to prefer avoiding losses than acquiring gains The status quo bias is a Cognitive bias for the Status quo; in other words people tend not to change an established behaviour unless the incentive to change is compelling The gambler's fallacy, also known as the Monte Carlo fallacy or the fallacy of the maturity of chances, is the false belief that if deviations from expected behaviour A self-serving bias occurs when people attribute their successes to internal or personal factors but attribute their failures to situational factors beyond their control Money illusion refers to the tendency of people to think of currency in nominal rather than real, terms In Economics, framing means the manner in which a Rational choice problem has been presented A concept first named by Richard Thaler (1980 mental accounting attempts to describe the process whereby people code categorise and evaluate Economic outcomes Anchoring or focalism is a Cognitive bias that describes the common human tendency to rely too heavily or "anchor" on one trait or piece of information The disposition effect is an anomaly discovered in Behavioral finance. The endowment effect (also known as divestiture aversion) is a hypothesis that people value a good or service more once their property right to it has been established Inequity aversion (IA is the preference for fairness and resistance to inequitable outcomes In Social psychology, reciprocity refers to responding to a positive action with another positive action and responding to a negative action with another negative one Economic theories of intertemporal consumption seek to explain people's Preferences in relation to consumption and Saving over the course of their life In Economics, dynamic inconsistency, or time inconsistency, describes a situation where a decision-maker's Preferences change over Time, such Momentum investing is a system of buying Stocks or other securities that have had high returns over the past three to twelve months and selling those that have had Greed and Fear are supposed together with Herd instinct, to be the three main emotional motivators of stock markets and business behavior and one of the Herd behaviour describes how individuals in a group can act together without planned direction In Economics and business decision-making sunk costs are Costs which cannot be recovered once they have been incurred The equity premium puzzle is a term coined by economists Rajnish Mehra and Edward C In Labor economics, the efficiency wage hypothesis argues that wages at least in some markets are determined by more than simply Supply and demand. Sticky is a term used in the social sciences and particularly Economics to describe a situation in which a variable is resistant to change Limits to arbitrage is a Theory which assumes that restrictions placed upon funds that would ordinarily be used by rational traders to Arbitrage away pricing The dividend puzzle is a concept in Finance in which companies that pay Dividends are rewarded by Investors with higher Valuations even though A fat tail is a property of some Probability distributions (alternatively referred to as Heavy-tailed distributions exhibiting extremely large Kurtosis particularly A calendar effect is any actual or hypothesized stock market trend based on the calendar such as rises and falls associated with particular days of the week or months of the year Rationality as a term is related to the idea of Reason, a word which following Webster's may be derived as much from older terms referring to They contend that experimentally observed behavior is inapplicable to market situations, as learning opportunities and competition will ensure at least a close approximation of rational behavior.

Others note that cognitive theories, such as prospect theory, are models of decision making, not generalized economic behavior, and are only applicable to the sort of once-off decision problems presented to experiment participants or survey respondents. Prospect theory is a theory that describes decisions between alternatives that involve Risk, i Decision making can be regarded as an outcome of mental processes ( cognitive process) leading to the selection of a course of action among several alternatives

Traditional economists are also skeptical of the experimental and survey based techniques which are used extensively in behavioral economics. Economists typically stress revealed preferences over stated preferences (from surveys) in the determination of economic value. Preference (also called " taste " or "penchant" is a concept used in the Social sciences particularly Economics. Experiments and surveys must be designed carefully to avoid systemic biases, strategic behavior and lack of incentive compatibility, and many economists are distrustful of results obtained in this manner due to the difficulty of eliminating these problems.

Rabin (1998)[12] dismisses these criticisms, claiming that results are typically reproduced in various situations and countries and can lead to good theoretical insight. Behavioral economists have also incorporated these criticisms by focusing on field studies rather than lab experiments. Some economists look at this split as a fundamental schism between experimental economics and behavioral economics, but prominent behavioral and experimental economists tend to overlap techniques and approaches in answering common questions. Experimental economics is a the application of experimental methods to study economic questions For example, many prominent behavioral economists are actively investigating neuroeconomics, which is entirely experimental and cannot be verified in the field. Neuroeconomics combines Neuroscience, Economics, and Psychology to study how people make decisions

Other proponents of behavioral economics note that neoclassical models often fail to predict outcomes in real world contexts. Behavioral insights can be used to update neoclassical equations, and behavioral economists note that these revised models not only reach the same correct predictions as the traditional models, but also correctly predict some outcomes where the traditional models failed.

Key figures in behavioral economics

Key scholars in behavioral finance

  • Terrance Odean
  • Hersh Shefrin
  • Robert Shiller
  • Andrei Shleifer
  • Vernon L. Smith
  • Meir Statman
  • Jeremy Stein
  • A. Dan Ariely is the James B Duke Professor of Behavioral Economics at Duke University. Gary Stanley Becker (born December 2, 1930) is an American Economist and a Nobel laureate. Colin F Camerer (born 1959 is an American behavioral economist and a Professor at the California Institute of Technology (Caltech whose PhD Ernst Fehr is an Austrian Economist. He is director of the Institute for Empirical Research in Economics at the University of Zurich, Switzerland Kenneth L Fisher (born November 29 1950 is an American businessman and the founder chairman and CEO of Fisher Investments a money management firm headquartered in Daniel Kahneman (דניאל כהנמן (born 5 March 1934 is an Israeli American psychologist and Nobel laureate, notable for his work on David Isaac Laibson is a professor of Economics at Harvard University, where he has taught since 1994 George Loewenstein is the Herbert A Simon Professor of Economics and Psychology in the Social and Decision Sciences Department at Carnegie Robert Duncan Luce (born May 16 1925 is the Distinguished Research Professor of Cognitive Science at the University of California Irvine. Matthew Joel Rabin (born December 27, 1963) is the Edward G and Nancy S Howard Rachlin (born 1935 is Emeritus Research Professor of Psychology Department of Psychology State University of New York Stony Brook ( SUNY, Stony Brook New York 11794 Herbert Alexander Simon ( June 15, 1916 February 9, 2001) was an American Political scientist whose research ranged Paul Slovic (born 1938 is a professor of Psychology at the University of Oregon and the president of the Decision Research group Richard H Thaler (born September 12, 1945, in East Orange) is an American economist perhaps best known as a theorist in Behavioral Amos Nathan Tversky, PhD (עמוס טברסקי March 16, 1937 - June 2, 1996) was a cognitive and mathematical psychologist Malcolm P Baker, PhD is a Professor of Finance, and a former Olympic Rower. Gunduz Caginalp is an American mathematician currently a professor at the University of Pittsburgh. David Hirshleifer is a prominent American Economist. He currently holds the Merage chair in Business Growth at the University of California at Irvine Hersh Shefrin (born in Winnipeg, Canada) is an economist best known for his pioneering work in Behavioral finance. Robert James "Bob" Shiller (born 1946 is an American economist academic and best-selling author Andrei Shleifer (ˈʃlaɪfəʁ (born February 20, 1961) is a prominent Russian American economist Vernon Lomax Smith (born January 1, 1927) is professor of Economics at Chapman University School of Law and School of Business in Orange Subrahmanyam
  • Richard Thaler

See also

Notes

  1. ^ Kirkpatrick, Charles D. Richard H Thaler (born September 12, 1945, in East Orange) is an American economist perhaps best known as a theorist in Behavioral Behavioral Operations Research ( BOR) examines the behavior of actual human agents in complex decision problems For an article about the conceptual problems of the mind see Cognitive closure (philosophy. Cognitive psychology is a branch of Psychology that investigates internal mental processes such as problem solving memory and language In Psychology and Cognitive science, confirmation bias is a tendency to search for or interpret new information in a way that confirms one's preconceptions and avoids Culture Speculation is the practice of engaging in or promoting an area or Region through either direct Investment or relocation Economic sociology is the Sociological analysis of economic phenomena Experimental economics is a the application of experimental methods to study economic questions The goals of experimental finance are to establish different market settings and environments to observe experimentally and analyze agents' behavior and the resulting characteristics Hindsight bias is the inclination to see events that have occurred as more predictable than they in fact were before they took place Macroeconomics Among the most important list of publication Foundations The Protestant Ethic and the Spirit of The Journal of Behavioral Finance is a peer-reviewed journal that publishes research related to the field of Behavioral finance. A Cognitive bias is a pattern of deviation in judgement that occurs in particular situations (see also Cognitive distortion and the Lists of thinking-related topics Neuroeconomics combines Neuroscience, Economics, and Psychology to study how people make decisions Robert R Prechter Jr (born 1949 is an American Author and stock market analyst known for his financial forecasts using the Elliott Wave principle. ; Dahlquist, Julie R. (2007). Technical Analysis, The Complete Resource for Market Technicians, p. 49.  
  2. ^ Ward Edward Papers. Archival Collections. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  3. ^ Luce, R Duncan (2000). Utility of Gains and Losses: Measurement-theoretical and Experimental Approaches. Mahwah, New Jersey: Lawrence Erlbaum Publishers.  
  4. ^ Hogarth, R. M. ; Reder, M. W. (1987). Rational choice: The contrast between economics and psychology. Chicago: University of Chicago Press.  
  5. ^ Nobel Laureates 2002. Nobelprize. org. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  6. ^ Shefrin, Hersh (2002). Beyond Greed and Fear: Understanding behavioral finance and the psychology of investing. Oxford University Press.  
  7. ^ Barberis, N; A. Shleifer, R. Vishny (1998). "``A Model of Investor Sentiment". Journal of Financial Economics 49: pp. 307-343.  
  8. ^ Dr. Donald A. Balenovich. Indiana University of Pennsylvania Mathematics Department. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  9. ^ Ahmet Duran. Department of Mathematics University of Michigan. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  10. ^ Welcome to Jeff Madura's Catalog. South-Western Cenage Learning. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  11. ^ Dr Ray R. Sturm, CPA. College of Business Administration. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.
  12. ^ Rabin, Matthew (March 1998). "Psychology and Economics". Journal of Economic Literature (1): 11-46. American Economic Association.  
  13. ^ Predictably Irrational. Dan Ariely. Retrieved on 2008-04-25. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1607 - Eighty Years' War: The Dutch fleet destroys the anchored Spanish fleet at Gibraltar.

References

External links

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