Welcome to Francis Academic Press

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

Behavioural Finance Versus Mainstream Finance


Lei Lei

Corresponding Author:
Lei Lei

Southampton Business School, University of Southamton, Southampton, UK


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.


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.


[1] Abdin, S.Z., Farooq, O., Sultana, N. and Farooq, M. (2017) 'The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms', Research in International Business and Finance, 42, pp. 674-688.

[2] Aney, M.S., Applebaum, E. and Banerji, S. (2019) 'Firm boundaries and financing with opportunistic stakeholder behaviour', Journal of Corporate Finance, 56, pp. 437-457.

[3] Baker, H.K. and Anderson, R. (2010) Corporate Governance: A Synthesis of Theory, Research and Practice, London: Wiley.

[4] Baxter, L.F. and Macleod, A.M. (2008) Managing Performance Improvement, New York: Routledge.

[5] Brigham, E.F. and Houston, J.F. (2019) Fundamentals of Financial Management, Cengage Learning.

[6] Cecchetti, S. and Schoenhholtz, K. (2018) Money, Banking and Financial Markets, New York: McGraw-Hill.

[7] Chen, Y., Podolski, E.J., Rhe, S.G. and Veeraghaven, M. (2017) 'Do progressive social norms affect economic outcomes? Evidence from corporate takeovers', Journal of Empirical Finance, 41, pp. 76-95.

[8] Fiberck, A., Ricciardi, V., Evnsky, H.R., Fan, S.Z., Holzauer, H.M. and Spieler, A. (2017) 'Behavioural finance: A panel discussion', Journal of Behavioural and Experimental Finance, 15, pp. 52-58.

[9] Filz, I., Nahmer, T. and Spiwoks, M. (2019) 'Herd behaviour and mood: An experimental study on the forecasting of share prices', Journal of Behavioural and Experimental Finance, 24, pp. 210-219.

[10] Grosse, R. (2017) 'The global financial crisis—Market misconduct and regulation from a behavioural view', Research in International Business Finance, 41, pp. 387-398.

[11] He, Y., Chen, C. and Hu, Y. (2019) 'Managerial overconfidence, internal financing, and investment efficiency: Evidence from China', Research in International Business and Finance, 47, pp. 501-510.

[12] Henskei, C. (2017) 'From quantum mechanics to finance: Micro foundations for jumps, spikes and high volatility phases in diffusion price processes', Physica A: Statistical Mechanics and its Application, 469, pp. 447-458.

[13] Hommes, C. and Veld, D.T. (2017) 'Booms, busts and behavioural heterogeneity in stock prices', Journal of Economic Dynamics and Control, 80, pp. 101-124.

[14] Kaplanski, G. and Levy, L. (2017) 'Analysts and sentiment: A causality study', The Quarterly Review of Economic and Finance, 63, pp. 315-327.

[15] Kapoor, S. and Prosad, J.M. (2017) 'Behavioural Finance: A Review', Procedia Computer Science, 122, pp. 50-54.

[16] Khasawneh, T. (2019) 'Introducing article numbering to Journal of Behavioural and Experimental Finance', Journal of Behavioural and Experimental Finance, 24, pp. 89-101.

[17] Siganos, A., Veganes-Nanos, E. and Verwjmeren, P. (2017) 'Divergence of sentiment and stock market trading', Journal of Banking and Finance, 78, pp. 130-141.

[18] Yurttadur, M. and Ozceilik, H. (2019) 'Evaluation of the Financial Investment Preferences of Individual Investors from Behavioural Finance: The Case of Istanbul', Procedia Computer Science, 158, pp. 761-765.