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Investors Behaviour between Theory and Practice

Author

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  • Oana Mionel

    (Dimitrie Cantemir Christian University)

Abstract

From the outside, financial markets appear dry and technical. However, their inner mechanism is psychological. Thus, this paper is dedicated to personality psychology, whose mastery is crucial to the investment game. Theory is different from practice, and that is why modern economic theories focus more on the psychological knowledge of the participants to the investment environment. Traditional economic model of the market have assumed that individuals/investors are “fully rational” and make decision optimally. In contrast, psychology has observed how they fail to be rational from an economic viewpoint when making decisions in the markets.

Suggested Citation

  • Oana Mionel, 2012. "Investors Behaviour between Theory and Practice," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(Special 1), pages 53-56, May.
    • Handle: RePEc:hur:ijaraf:v:2:y:2012:i:1special:p:53-56
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    References listed on IDEAS

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    2. 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..
    3. Cosmides, Leda & Tooby, John, 1994. "Better than Rational: Evolutionary Psychology and the Invisible Hand," American Economic Review, American Economic Association, vol. 84(2), pages 327-332, May.
    4. Barberis, Nicholas & Shleifer, Andrei, 2003. "Style investing," Journal of Financial Economics, Elsevier, vol. 68(2), pages 161-199, May.
    5. Sushil Bikhchandani & David Hirshleifer & Ivo Welch, 1998. "Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 151-170, Summer.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Trading skills; personality psychology; risk; decision;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance

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