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Behavioural Finance

Behavioural Finance
Related:  Fiscal Educationinversiones4.8. Finance glossary

Behavioral Finance: Introduction By Albert Phung According to conventional financial theory, the world and its participants are, for the most part, rational "wealth maximizers". However, there are many instances where emotion and psychology influence our decisions, causing us to behave in unpredictable or irrational ways. Behavioral finance is a relatively new field that seeks to combine behavioral and cognitive psychological theory with conventional economics and finance to provide explanations for why people make irrational financial decisions. By the end of this tutorial, we hope that you'll have a better understanding of some of the anomalies (i.e., irregularities) that conventional financial theories have failed to explain. (For related reading, see Taking A Chance Of Behavioral Finance and Leading Indicators Of Behavioral Finance.)

Behavioral economics There are three prevalent themes in behavioral finances:[3] Issues in behavioral economics[edit] Behavioral finance[edit] The central issue in behavioral finance is explaining why market participants make systematic errors contrary to assumption of rational market participants.[1] Such errors affect prices and returns, creating market inefficiencies. Behavioral finance highlights inefficiencies such as under- or over-reactions to information as causes of market trends (and in extreme cases of bubbles and crashes). Other key observations include the asymmetry between decisions to acquire or keep resources, known as the "bird in the bush" paradox, and loss aversion, the unwillingness to let go of a valued possession. Quantitative behavioral finance[edit] Quantitative behavioral finance uses mathematical and statistical methodology to understand behavioral biases. Financial models[edit] The stock image coefficient Criticisms[edit] Behavioral game theory[edit] The animal as a human analog[edit]

Browse: IMF eLibrary Vuelta a Lo Esencial: Pensamiento estratégico - La teoría de juegos analiza el comportamiento cuando en las decisiones es preciso tener en cuenta las posibles acciones de los oponentes » Source: Finanzas y Desarrollo, Diciembre de 2015 Volume/Issue: 52/4 Series: Finance & Development Author(s): International Monetary Fund. Publisher: INTERNATIONAL MONETARY FUND Publication Date: 16 December 2015 Language: Spanish Keywords: energy, carbon, emissions, climate, investment, All Countries, Finance and Development, December 2015 Renacimiento de la inversión: China desempeña un papel importante en la creciente inversión extranjera en África, aunque está lejos de ocupar una posición dominante » Recuperando la energía: Los consumidores estadounidenses tendrán un rol importante a la hora de configurar el sistema energético del futuro » Política e inversión pública: La seducción de los electores durante el período electoral puede cambiar drásticamente las decisiones sobre el gasto en infraestructura »

Comprendre les mots de la finance Subprimes, dark pools, titrisation, sous-jacent... La crise économique charrie chaque jour son lot de termes plus ou moins obscurs. Ce lexique a pour but d'éclairer les concepts les plus abscons du monde de la finance. Subprimes, dark pools, titrisation, sous-jacent... IPO (initial public offering) : introduction en Bourse d'une entreprise.OPA (offre publique d'achat) : l'OPA est déclenchée lorsqu'une entreprise (ou une personne physique) annonce officiellement qu'elle se porte acheteuse d'actions d'une entreprise cotée en Bourse, dans le but de monter au capital et d'en prendre le contrôle.Marché primaire : lieu d'émission des nouveaux titres.Marché secondaire : lieu où un acheteur peut revendre ses titres, à un cours défini par la confrontation de l'offre et de la demande. >> Lire "Dark pools, les dérives d'une finance de l'ombre" >> Lire "Finance de l'ombre : 'les autorités ont fermé les yeux'" >> Lire "L'essor vertigineux du trading algorithmique"

Delaying gratification is about worldview as much as willpower | Psychology Willpower alone doesn’t explain why some children forgo a marshmallow in hand for the prospect of getting two gooey treats later. Kids’ beliefs about the reliability of the people around them, such as the trustworthiness of an experimenter, can dramatically shape their willingness to wait for a sweeter payoff, a new study finds. ANTICIPATION A young volunteer contemplates a tempting sugary treat during an experiment that tests her willingness to wait for a better reward. In a recent experiment, kids who dealt with a more trustworthy experimenter were more likely to resist the urge to eat a marshmallow when told that abstaining would earn them a second one. J. Expectations about whether it’s best to grab goodies before they disappear or trust that bigger returns will come later are as important to delaying gratification as self-control, say psychologist Celeste Kidd of the University of Rochester in New York and her colleagues.

Credit Repair Guru - Free Credit Consultation The American Association of Individual Investors Securitization Securitization is a financial arrangement that consists of issuing securities that are backed by a pool of assets, in most cases debt. The underlying assets are “transformed” into securities, hence the expression “securitization.” The holder of the security receives income from the products of the underlying assets, and this has given rise to the generic term ABS (Asset-Backed Securities). Note:All securities, of course, are backed by an asset in some way… just not as directly as in the case of securitization: The most direct link is in the case of fund units, such as UCITS: one unit in a mutual fund represents investments that the fund manager has made in stocks and bonds, and the value of the unit correlates directly to the market valuation of the securities in question. However, in the case of stocks and bonds, the issuer’s ability to ultimately repay the security issued is subject to all sorts of uncertainties that go beyond the issuer’s managerial and entrepreneurial skills.

Endowment effect In behavioral economics, the endowment effect (also known as divestiture aversion) is the hypothesis that people ascribe more value to things merely because they own them.[1] This is illustrated by the observation that people will tend to pay more to retain something they own than to obtain something owned by someone else—even when there is no cause for attachment, or even if the item was only obtained minutes ago. Examples[edit] One of the most famous examples of the endowment effect in the literature is from a study by Kahneman, Knetsch & Thaler (1990)[2] where participants were given a mug and then offered the chance to sell it or trade it for an equally priced alternative good (pens). Other examples of the endowment effect include work by Carmon and Ariely (2000)[3] who found that participants' hypothetical selling price (WTA) for NCAA final four tournament tickets were 14 times higher than their hypothetical buying price (WTP). Background[edit] Theoretical explanations[edit]

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