Behavioural Finance Versus Mainstream Finance

Abstract

This paper introduces behavioral finance and mainstream finance. Behavioral finance is a more extensive and inclusive field, because it combines economy, finance, behavior and cognitive psychology to effectively explain and explain why investors in the market engage in irrational financial decision-making Zion manufacturing process. When mainstream finance considers all information, investors are more likely to participate in the rational decision-making process, this in turn helps to better achieve the goal of wealth maximization, in addition, bias is an "illogical preference or irrational hypothesis that affects the decision-making process". Considering this, we can see that when an investor has behavioral bias, he / she is more likely to ignore the evidence, especially the evidence inconsistent with the assumptions he / she holds in decision-making. Confirmation deviation is one of the main deviations witnessed by investors.