EVOLUTION OF BEHAVIORAL FINANCE

P. Veni , Rajani Kandregula

Standard finance, Behavioral Finance, Behavioral Biases, Investment Decision.

While standard finance emphasizes theories such as modern portfolio theory and the efficient market hypothesis, this paper explores the evolution of modern behavioral finance theories from the traditional framework. Behavioral finance is a financial theory which has risen since 1980s. In recent years its influence has increasingly spread and has vigorously challenged modern financial theories to the investors for better decision making. It discusses three main issues. First, it predicts the importance of standard finance theories and the situations where they become insufficient i.e. market anomalies. Second, it signifies the role of behavioral finance in narrowing down the gaps between traditional finance theories and actual market conditions. This involves the substitution of standard finance theories with more realistic behavioral theories like the prospect theory (Kahneman & Tversky, 1979). In the end, it discusses some general principles of behavioral biases including the following: heuristic factors, herd behavior, financial cognitive dissonance, the theory of regret, and prospect theory, their underlying psychology and their impact on financial markets and decision making of investors.

Published Paper   E-Certificate

"EVOLUTION OF BEHAVIORAL FINANCE", IJSDR - International Journal of Scientific Development and Research (www.IJSDR.org), ISSN:2455-2631, Vol.5, Issue 3, page no.209 - 215, March-2020, Available :https://ijsdr.org/papers/IJSDR2003039.pdf

Volume 5 Issue 3, March-2020

Pages : 209 - 215

Paper Reg. ID: IJSDR_191483

Published Paper Id: IJSDR2003039

Downloads: 000347389

Research Area: Engineering

Country: -, -, -

Published Paper PDF: https://ijsdr.org/papers/IJSDR2003039

Published Paper URL: https://ijsdr.org/viewpaperforall?paper=IJSDR2003039

ISSN: 2455-2631 | IMPACT FACTOR: 9.15 Calculated By Google Scholar | ESTD YEAR: 2016

An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.15 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator

Publisher: IJSDR(IJ Publication) Janvi Wave

This work is licensed under a Creative Commons Attribution 4.0 International License and The Open Definition