Behavioral Finance (Economics)

From Duke University - The Fuqua School of Business funny:



Few traits:
1. Irrational Behavior of investors
2. "Prospecting" theory - investors view the outcomes relative to the point where they started, such as "initial wealth" but not the underlying initial conditions of the market or stock itself.
3. Shortsightedness
4. Overconfidence
5. Hindsight Bias
6. "bipolar" approach
7. Representativeness
8. "Fear of regret" or "fear of losses" - tendency to sell winning stocks too soon and hold on to the loosing ones for too long due to "loss avoidance".
9. "Error of the Availability"
10."Halo Effect"
11."Framing"
12."Anchoring"
13. "Confirmation bias" - tendency to overweight confirming evidence, kind of like "selective vision" which is a result of unconscious "search for evidence"
14. "Escalation bias" or " sunk cost fallacy"


Researchers in the subject to look for:

1.James Montier "Behavioral Finance: Insights into Traditional Minds and Markets"

2.Amos Tversky and Daniel Kahneman(Stanford Univ, Nobel Prize in Economics 2002) "prospect theory"

3.Meir Statman (Santa Clara Univ)
4.Terry Odean (Univ of California at Berkeley)
5.John M. Keyes "people would rather fail conventionally than succeed unconventionally"
6.Stuart Sutherland "Irrationally: Why We Don't Think Straight!"
7.David Dreman?
8.Richard Thaler (Univ of Chicago) "Myopic Loss Aversion..."
9.Werner F.M. De Bondt (Univ?)
10.Terry Burnham "Mean Markets and Lizard Brains" (MIT?)
11.Woody Dorsey "Behavioral Trading: Methods for Measuring Investor Confidence...."