Behavioral Finance: The Psychology That Influences Financial Outcomes
Behavioral finance explains why smart, successful people still make emotional money decisions. Part psychology, part economics, this field of study explores how emotional factors, cognitive biases, and psychological shortcuts influence investors, market behavior, and financial outcomes. It examines how people behave with money, especially under stress or uncertainty. Traditional finance assumes that investors process all available information and act logically based on that information. Behavioral finance, on the other hand, suggests that emotions, shortcuts, and personal experience often drive decisions instead. ….[READ]
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