Behavioral finance: new research trends, socionomics and investor emotions
The paper presents a critique of standard investment analysis, fundamental and technical, and develops an alternative more comprehensive approach that should include some of the tenets of behavioral finance. In the pursuit of understanding the behavior of the market player, the basic argument relies...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
General Association of Economists from Romania
2014-04-01
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| Series: | Theoretical and Applied Economics |
| Subjects: | |
| Online Access: |
http://store.ectap.ro/articole/978.pdf
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| _version_ | 1818060213843918848 |
|---|---|
| author | Adrian MITROI Alexandru OPROIU |
| author_facet | Adrian MITROI Alexandru OPROIU |
| author_sort | Adrian MITROI |
| collection | DOAJ |
| description | The paper presents a critique of standard investment analysis,
fundamental and technical, and develops an alternative more comprehensive
approach that should include some of the tenets of behavioral finance. In the
pursuit of understanding the behavior of the market player, the basic argument
relies on the supposition that the risk appetite increases exactly at the worst
moment - when the capacity to assume additional risk decreases significantly.
People view a sample randomly drawn from a population as highly representative
and quasi similar to the population in all its essential characteristics. They expect
any two samples drawn from a particular population to be more similar to one
another and to the population than is statistically justifiable. This behavior is
different from the tenets of classic finance theory. The paper aims at demonstrating
that investor psychological biases lead to investment performance to tilt to the
mean in the long run and by following the trend, the financial market population
does not enjoy significant sustainable benefits. As a reflection of the behavioral
biases and influences, the statistical demonstration supports the conclusion that
markets do not random walk. |
| first_indexed | 2024-12-10T13:28:51Z |
| format | Article |
| id | doaj.art-0d729baa951045ddaa607695a98c8b59 |
| institution | Directory Open Access Journal |
| issn | 1841-8678 1844-0029 |
| language | English |
| last_indexed | 2024-12-10T13:28:51Z |
| publishDate | 2014-04-01 |
| publisher | General Association of Economists from Romania |
| record_format | Article |
| series | Theoretical and Applied Economics |
| spelling | doaj.art-0d729baa951045ddaa607695a98c8b592022-12-22T01:47:04ZengGeneral Association of Economists from RomaniaTheoretical and Applied Economics1841-86781844-00292014-04-01XXI415316618418678Behavioral finance: new research trends, socionomics and investor emotionsAdrian MITROI0Alexandru OPROIU1 Bucharest University of Economic Studies, Romania Bucharest University of Economic Studies, Romania The paper presents a critique of standard investment analysis, fundamental and technical, and develops an alternative more comprehensive approach that should include some of the tenets of behavioral finance. In the pursuit of understanding the behavior of the market player, the basic argument relies on the supposition that the risk appetite increases exactly at the worst moment - when the capacity to assume additional risk decreases significantly. People view a sample randomly drawn from a population as highly representative and quasi similar to the population in all its essential characteristics. They expect any two samples drawn from a particular population to be more similar to one another and to the population than is statistically justifiable. This behavior is different from the tenets of classic finance theory. The paper aims at demonstrating that investor psychological biases lead to investment performance to tilt to the mean in the long run and by following the trend, the financial market population does not enjoy significant sustainable benefits. As a reflection of the behavioral biases and influences, the statistical demonstration supports the conclusion that markets do not random walk. http://store.ectap.ro/articole/978.pdf psychologybiasesefficiencyindividual investment |
| spellingShingle | Adrian MITROI Alexandru OPROIU Behavioral finance: new research trends, socionomics and investor emotions Theoretical and Applied Economics psychology biases efficiency individual investment |
| title | Behavioral finance: new research trends, socionomics and investor emotions |
| title_full | Behavioral finance: new research trends, socionomics and investor emotions |
| title_fullStr | Behavioral finance: new research trends, socionomics and investor emotions |
| title_full_unstemmed | Behavioral finance: new research trends, socionomics and investor emotions |
| title_short | Behavioral finance: new research trends, socionomics and investor emotions |
| title_sort | behavioral finance new research trends socionomics and investor emotions |
| topic | psychology biases efficiency individual investment |
| url |
http://store.ectap.ro/articole/978.pdf
|
| work_keys_str_mv | AT adrianmitroi behavioralfinancenewresearchtrendssocionomicsandinvestoremotions AT alexandruoproiu behavioralfinancenewresearchtrendssocionomicsandinvestoremotions |