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Maslowian Portfolio Theory: An alternative formulation of the Behavioural Portfolio Theory

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  • Philippe J S De Brouwer

    (KBC TFI S.A.)

Abstract

This paper aims to offer an alternative formulation of the Behavioural Portfolio Theory as formulated by Hersh Shefrin and Meir Statman (2000) via the Theory of Needs from Abraham Maslow (1943). This alternative formulation, called Maslowian Portfolio Theory (MaPT), yields the same results but adds some interesting insight and practical applications for the financial advisor. MaPT starts from the needs of the investor and therefore can have the ambition to be a predictive theory rather than a descriptive theory. This paper also tries to fit portfolio selection theories with the needs of the investor, and to give very applicable advice.

Suggested Citation

  • Philippe J S De Brouwer, 2009. "Maslowian Portfolio Theory: An alternative formulation of the Behavioural Portfolio Theory," Journal of Asset Management, Palgrave Macmillan, vol. 9(6), pages 359-365, February.
    • Handle: RePEc:pal:assmgt:v:9:y:2009:i:6:d:10.1057_jam.2008.35
    DOI: 10.1057/jam.2008.35
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    References listed on IDEAS

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    1. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    2. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279-279.
    3. Shefrin, Hersh & Statman, Meir, 2000. "Behavioral Portfolio Theory," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(2), pages 127-151, June.
    4. P de Brouwer & F van den Spiegel, 2001. "The fallacy of large numbers revisited: The construction of a utility function that leads to the acceptance of two games, while one is rejected," Journal of Asset Management, Palgrave Macmillan, vol. 1(3), pages 257-266, January.
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    Cited by:

    1. Philippe de Brouwer, 2016. "Proposal for a Practical Implementation of Maslowian Portfolio Theory (Wniosek dotyczacy praktycznego wdrozenia Maslowian Portfolio Theory)," Problemy Zarzadzania, University of Warsaw, Faculty of Management, vol. 14(63), pages 39-56.
    2. Zongxin Li & Xinge Li & Yongchang Hui & Wing-Keung Wong, 2018. "Maslow Portfolio Selection for Individuals with Low Financial Sustainability," Sustainability, MDPI, vol. 10(4), pages 1-11, April.
    3. Philippe J S De Brouwer, 2012. "Target-oriented investment advice," Journal of Asset Management, Palgrave Macmillan, vol. 13(2), pages 102-114, April.

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