Abstract
Conventional and modern finance is related to various theories and concepts that has done respectable job in financial market in providing guidance for strategic financial decisions. Among all, emerging behavior finance has come up with psychological and sociological issues that affects the financial choices and are often ignored by modernized financial theories. This paper will elaborate the concept of behavior finance and its relation with Efficient Market Hypothesis. The paper helps us to known that the loopholes in EMH gave birth to behavior finance but due to lack of clarity of its usage it could not be acceptedfully by the market. It is also observed that the psychological factors or cognitive factors that cannot be incorporated objectively in financial decision making process may make difference in valuation ofsecurity, thus, it is very important to keep such factors into consideration. The paper is primarily based on secondary study of research conducted on behavioral finance and can provide an insight on importance of qualitative factors in financial decision making process.
Keywords
Behavior, Anomalies, Overconfidence, Regret Theory, Prospect Theory
Recommended Citation
Bhutani, Shweta
(2014)
"Behavior Finance or Financial Behavior?,"
Management Dynamics: Vol. 14:
No.
1, Article 2: 1-15
DOI: https://doi.org/10.57198/2583-4932.1103
Available at:
https://managementdynamics.researchcommons.org/journal/vol14/iss1/2
