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Academic Journal of Business & Management, 2021, 3(11); doi: 10.25236/AJBM.2021.031119.

Behavioural Finance Versus Mainstream Finance

Author(s)

Lei Lei

Corresponding Author:
Lei Lei
Affiliation(s)

Southampton Business School, University of Southamton, Southampton, UK

Abstract

This paper introduces behavioral finance and mainstream finance. Behavioral finance is a more extensive and inclusive field, because it combines economy, finance, behavior and cognitive psychology to effectively explain and explain why investors in the market engage in irrational financial decision-making Zion manufacturing process. When mainstream finance considers all information, investors are more likely to participate in the rational decision-making process, this in turn helps to better achieve the goal of wealth maximization, in addition, bias is an "illogical preference or irrational hypothesis that affects the decision-making process". Considering this, we can see that when an investor has behavioral bias, he / she is more likely to ignore the evidence, especially the evidence inconsistent with the assumptions he / she holds in decision-making. Confirmation deviation is one of the main deviations witnessed by investors.

Keywords

Behaviour finance, Maninstream fiance, Confirmation Bias

Cite This Paper

Lei Lei. Behavioural Finance Versus Mainstream Finance. Academic Journal of Business & Management (2021) Vol. 3, Issue 11: 99-102. https://doi.org/10.25236/AJBM.2021.031119.

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