Book description
Investor Behavior provides readers with a comprehensive understanding and the latest research in the area of behavioral finance and investor decision making. Blending contributions from noted academics and experienced practitioners, this 30-chapter book will provide investment professionals with insights on how to understand and manage client behavior; a framework for interpreting financial market activity; and an in-depth understanding of this important new field of investment research. The book should also be of interest to academics, investors, and students.
The book will cover the major principles of investor psychology, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion. Specific sections of the book will delve into the role of personality traits, financial therapy, retirement planning, financial coaching, and emotions in investment decisions. Other topics covered include risk perception and tolerance, asset allocation decisions under inertia and inattention bias; evidenced based financial planning, motivation and satisfaction, behavioral investment management, and neurofinance. Contributions will delve into the behavioral underpinnings of various trading and investment topics including trader psychology, stock momentum, earnings surprises, and anomalies. The final chapters of the book examine new research on socially responsible investing, mutual funds, and real estate investing from a behavioral perspective. Empirical evidence and current literature about each type of investment issue are featured. Cited research studies are presented in a straightforward manner focusing on the comprehension of study findings, rather than on the details of mathematical frameworks.
Table of contents
- Cover
- Series
- Title Page
- Copyright
- Acknowledgments
-
Part One: Foundations of Investor Behavior
- Chapter 1: Investor Behavior: An Overview
- Chapter 2: Traditional and Behavioral Finance
-
Chapter 3: Behavioral Economics, Thinking Processes, Decision Making, and Investment Behavior
- INTRODUCTION
- BEHAVIORAL ECONOMICS, HEURISTICS, AND DECISION MAKING
- INVESTMENT HEURISTICS AND INVESTING IN FINANCIAL ASSETS
- THE TRUST HEURISTIC AND DECISION MAKING
- OTHER CRITICAL DECISION-MAKING HEURISTICS
- RATIONAL INVESTOR DECISION MAKING IN A WORLD OF COMPLEX INFORMATION
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHOR
-
Part Two: Personal Finance Issues
- Chapter 4: Financial Literacy and Education
- Chapter 5: Household Investment Decisions
- Chapter 6: Personality Traits
- Chapter 7: Demographic and Socioeconomic Factors of Investors
- Chapter 8: The Effect of Religion on Financial and Investing Decisions
- Chapter 9: Money and Happiness: Implications for Investor Behavior
- Chapter 10: Motivation and Satisfaction
-
Part Three: Financial Planning Concepts
-
Chapter 11: Policy-Based Financial Planning: Decision Rules for a Changing World
- INTRODUCTION
- MANAGING BEHAVIORAL BIASES IN THE FINANCIAL PLANNING ENGAGEMENT
- A PROCESS FOR DEVELOPING FINANCIAL PLANNING POLICIES
- APPLICABILITY OF FINANCIAL PLANNING POLICIES
- POLICY-BASED FINANCIAL PLANNING: THE STRATEGIC PERSPECTIVE
- EXAMPLE OF POLICIES DERIVED THROUGH STOCHASTIC MODELING
- SAMPLE CASE APPLICATIONS
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHORS
- Chapter 12: Financial Counseling and Coaching
- Chapter 13: Financial Therapy: De-Biasing and Client Behaviors
- Chapter 14: Transpersonal Economics
-
Chapter 15: Advising the Behavioral Investor: Lessons from the Real World
- INTRODUCTION
- RISK, RETURN, AND THE INVESTOR: A COMPLEX RELATIONSHIP
- INVESTMENTS WITH PEOPLE PROBLEMS
- THE IMPACT OF INVESTOR BEHAVIOR ON PORTFOLIOS
- HOW ADVISORS CAN HELP THE BEHAVIORAL INVESTOR
- TURNING BIAS INTO BENEFIT: HOW TO PROFIT FROM INVESTOR BEHAVIOR
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- DISCLOSURE
- ABOUT THE AUTHOR
-
Chapter 16: Retirement Planning: Contributions from the Field of Behavioral Finance and Economics
- INTRODUCTION
- A LIFE CYCLE FINANCIAL PLANNING AND WEALTH MANAGEMENT MODEL
- DEMOGRAPHIC AND MACROECONOMIC CONTEXT
- BIASES, HEURISTICS, AND FRAMING EFFECTS ON RETIREMENT PLANNING
- HYPERBOLIC DISCOUNTING
- THE ROLE OF THE BRAIN IN FINANCIAL DECISION-MAKING
- FINANCIAL DECISION-MAKING QUALITY AND AGE
- THE ROLE OF SELF-AWARENESS AND SELF-CONTROL
- TRUST AND RETIREMENT SAVING AND PLANNING: THE BASICS
- TRUST AND RETIREMENT SAVING AND PLANNING: THE DECISION
- TRUST-BASED IMPLICATIONS FOR RETIREMENT SAVING AND PLANNING
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHORS
-
Chapter 17: Knowing Your Numbers: A Scorecard Approach to Improved Medical and Financial Outcomes
- INTRODUCTION
- THE NEED FOR BETTER CONTROL OF CHRONIC DISEASES
- THE SCORECARD APPROACH
- TARGET POPULATION AND ADVANTAGES
- CONTENT OF THE TAKE CARE SCORECARD
- CONSIDERATIONS FOR HEALTH AND FINANCIAL LITERACY SCORECARDS
- LIMITATIONS
- IMPLICATIONS FOR FINANCIAL LITERACY
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHORS
- ACKNOWLEDGMENT
-
Chapter 11: Policy-Based Financial Planning: Decision Rules for a Changing World
-
Part Four: Investor Psychology
-
Chapter 18: Risk Perception and Risk Tolerance
- INTRODUCTION
- RISK PERCEPTION
- THE RELATIONSHIP BETWEEN RISK PERCEPTION AND RISK TOLERANCE
- AN OVERVIEW OF RISK TOLERANCE
- MEASUREMENT OF RISK TOLERANCE
- THE ROLE OF EMOTION IN RISK PERCEPTION AND RISK TOLERANCE
- RISK-TAKING BEHAVIOR: THE INFLUENCE OF MARKET MOODS, BUSINESS CYCLES, AND ECONOMIC SHOCKS
- UNRESOLVED ISSUES IN THE RISK DOMAIN
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHORS
- Chapter 19: Emotions in the Financial Markets
- Chapter 20: Human Psychology and Market Seasonality
- Chapter 21: Neurofinance
- Chapter 22: Diversification and Asset Allocation Puzzles
- Chapter 23: Behavioral Portfolio Theory and Investment Management
- Chapter 24: Post-Crisis Investor Behavior: Experience Matters
-
Chapter 18: Risk Perception and Risk Tolerance
-
Part Five: Trading and Investing Psychology and Strategies
- Chapter 25: The Psychology of Trading and Investing
- Chapter 26: The Surprising Real World of Traders' Psychology
-
Chapter 27: Trading and Investment Strategies in Behavioral Finance
- INTRODUCTION
- DISTINCTION BETWEEN TRADING AND INVESTMENT STRATEGIES
- ACTIVE VERSUS PASSIVE INVESTMENT STRATEGIES AND BEHAVIORAL FINANCE
- AVERAGE INVESTORS SUFFER FROM BEHAVIORAL BIASES
- PROBLEMS WITH TRADITIONAL INVESTMENT STRATEGIES
- SHORT-TERM BEHAVIORALLY BASED TRADING STRATEGIES
- LONG-TERM BEHAVIORALLY BASED INVESTMENT STRATEGIES
- CURRENT AND FUTURE TRENDS IN BEHAVIORAL FINANCE STRATEGIES
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHOR
-
Part Six: Special Investment Topics
- Chapter 28: Ethical and Socially Responsible Investing
-
Chapter 29: Mutual Funds and Individual Investors: Advertising and Behavioral Issues
- INTRODUCTION
- ADVERTISING AND PERFORMANCE
- ADVERTISING, EXPENSES, AND FLOWS
- ADVERTISING, EMOTIONS, AND CHOICE
- BEHAVIORAL PERSUASION IN ADVERTISING AND CHOICE
- EDUCATION, FINANCIAL KNOWLEDGE, AND CHOICE
- EMOTIONS, BEHAVIOR, AND CHOICE
- EMOTIONS, BEHAVIORAL FINANCE, AND CHOICE
- FINANCIAL LITERACY AND ACTIVE MANAGEMENT
- PRICE AND PERFORMANCE SENSITIVITY AND REPRICING
- SENTIMENT CONTRARIAN BEHAVIOR AND ACTUAL PERFORMANCE
- SUMMARY
- DISCUSSION QUESTIONS
- REFERENCES
- ABOUT THE AUTHOR
- Chapter 30: Real Estate Investment Decision-Making in Behavioral Finance
- Answers to Discussion Questions
- Index
Product information
- Title: Investor Behavior: The Psychology of Financial Planning and Investing
- Author(s):
- Release date: February 2014
- Publisher(s): Wiley
- ISBN: 9781118492987
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