When investing, each investor will establish a risk appetite that defines the risk they are willing to take. Several factors contribute to how much uncertainty investors will accept. Based on that, some investors will face risks and get rewards for them. For some others, the uncertainty involving losses may be …

What is Mental Accounting Bias? Mental accounting is a process that individuals use to assign subjective values to their money. However, these values go against the accepted economic principles. Mental accounting is a concept that comes from behavioural economics. Often, people tend to place varying values on the same amount …

In finance and investing, making accurate predictions based on certain factors is critical. If an investor makes the correct prediction, they can expect high returns. However, wrong forecasts can also be vital, as they can cause losses. There are several factors that may influence whether someone makes the correct predictions. …

What is the Illusion of Control Bias? The illusion of control bias is a type of bias in behavioural finance that gives people the illusion of control. People that inherit this behaviour tend to overestimate the power or control they have over a circumstance. Therefore, they tend to think they …

Behavioural finance refers to the study of psychological influences and biases that affect the behaviour or decisions of investors. It also studies how these influences affect the market. One of the primary areas in behavioural finance is the study of biases. A behavioural bias is an irrational belief that can …

Behavioural finance is a field of behavioural economics that deals with the psychological influences and biases that affect investors. These biases exist in the decisions that investors make and can cause them to make the wrong choices. There are several types of biases that investors may face during their investing …

What is Adaptive Market Hypothesis? The adaptive market hypothesis (AMH) comes from the works of Andrew Lo from 2004. This hypothesis brings together the principles of the efficient market hypothesis (EMH) and behavioural finance. It does so by applying the principles of evolution to financial interactions. These principles include adaptation, …

Behavioural economics studies the psychology that relates to the decision-making process of investors. It looks at how investors allow psychological factors to impact their decisions. It goes against traditional finance theories, which assume that individuals don’t let biases affect their decision-making. Behavioural economics also studies the subsequent effects on the …

What is Behavioural Finance? Behavioural finance is a field of behavioural economics that deals with investors’ psychological influences and biases. It studies how these influences and biases affect the financial behaviour that investors use in investing decisions. Similarly, behavioural finance also explores market anomalies, specifically in the stock market. It …

What is Behavioral Finance? Behavioral finance is the study of how psychological factors influence the behavior of investors or financial analysts. It is a topic closely related and a part of behavioral economics. Behavioral finance suggests that psychological influences and biases can affect an investor or financial analyst’s behavior. It …