Behavioral Finance- Impact in Decision-Making
Behavioral finance is the social sciences to finance which is intimately linked with the scientific research on human behavior and social, cognitive and emotional factors. Behavioral finance better comprehend economic decisions by consumers, borrowers, investors, and it let you know how it can affect market prices, ROI and the allocation of resources.
Psychological patterns such as overconfidence and perceived assumption may bring twist in the value function and thus it can impact financial decision-making. This video focus on Kahneman and Tversky’s Prospect Theory addressing such issues and sheds light on irrational deviations from traditional decision-making models. :
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