Behavioral Finance

What Does Behavioral Finance Mean?
A field of finance that proposes psychology-based theories to explain stock market anomalies. Within behavioral finance, it is assumed that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes.

Investopedia explains Behavioral Finance
There have been many studies that have documented long-term historical phenomena in securities markets that contradict the efficient market hypothesis and cannot be captured plausibly in models based on perfect investor rationality. Behavioral finance attempts to fill the void.

Filed Under: Financial Theory

Related Terms

Behavioral Economics
Efficient Market Hypothesis - EMH
Gambler's Fallacy
Herd Instinct
Lemming
Market Psychology
Market Sentiment
Media Effect
Rational Behavior
Reflexivity
More Related Terms

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