Abstract
The basic objective of this paper is to introduce the definition of different psychological biases that included in behavioural finance, find out the reasons why people behave differently in real life financial market from what is understood by traditional finance, elaborate the meaning of apply behavioural finance in people’s daily life, explain the importance of behavioural finance to modern economics. According to different experiments in previous research papers include mug test, caterpillar effect and several famous tests to explain four different categories of behavioural finance which are framing effect, loss aversion, endowment effect and herd instinct. In each categories described the definition, to connect the behaviour with human habits and give the examples to explain the reason of this psychological biases relate to the real financial market. This paper also includes the analysis of the impact of behavioural finance on human decision-making process and the future prospects of behavioural finance to explain and excavate the future research direction, identify drawbacks in current research content.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
