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Finance and the Behavioral Prospect

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This book explains how investor behavior, from mental accounting to the combustible interplay of hope and fear, affects financial economics. The transformation of portfolio theory begins with the identification of anomalies. Gaps in perception and behavioral departures from rationality spur momentum, irrational exuberance, and speculative bubbles. Behavioral accounting undermines the rational premises of mathematical finance. Assets and portfolios are imbued with “affect.” Positive and negative emotions warp investment decisions. Whether hedging against intertemporal changes in their ability to bear risk or climbing a psychological hierarchy of needs, investors arrange their portfolios and financial affairs according to emotions and perceptions. Risk aversion and life-cycle theories of consumption provide possible solutions to the equity premium puzzle, an iconic financial mystery. Prospect theory has questioned the cogency of the efficient capital markets hypothesis. Behavioral portfolio theory arises from a psychological account of security, potential, and aspiration.

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Detail Information

Series Title

Quantitative Perspectives on Behavioral Economics and Finance

Call Number

-

Publisher

Palgrave Macmillan Cham : Palgrave Macmillan Cham., 2016

Collation

XII, 343

Language

English

ISBN/ISSN

978-3-319-32711-2

Classification

NONE

Content Type

text

Media Type

computer

Carrier Type

-

Edition

-

Subject(s)

Behavioral/Experimental Economics

Specific Detail Info

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Statement of Responsibility

James Ming Chen

Other Information

Cataloger

Jemadi

Source

https://link.springer.com/content/pdf/10.1007/978-3-319-32711-2.pdf?pdf=button

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