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Article . 2022
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Psychology of investors: reexamination of the traditional finance

Authors: BENJANA, Hajar; YAMANI, Oumaima;

Psychology of investors: reexamination of the traditional finance

Abstract

Traditional finance and behavioral finance are two branches of finance, dealing differently with the decision-making choices of stock brokers, whether on the financial markets or in the company of which they are shareholders. The traditional approach is based on the hypothesis of the efficiency of financial markets and the perfect rationality of the stock market, on the other hand, the behavioral one takes into consideration the impact of cognitive bias and emotional bias on the decision-making process. Rationality and irrationality are two explainable concepts of the decision-making of the drone operators. According to the traditional, stock brokers are “rational” since they allow the price of a share to be linked with its fundamental value and the cancellation of any divergence through arbitration. However, behaviorists describe drone operators as “irrational” because they are humans, driven by emotions and judgment heuristics that interfere with their rational behavior and investment decisions. The purpose of this article is first to clarify the basic foundations of each reasoning, so that we can know whether behavioral finance actually offers remedies for a good understanding of the behaviors of drones.

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Keywords

Financial markets; stock markets; rationality; irrationality; behaviors

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
Green