Behaviorism

Behaviorism...

  • Is a subfield of psychology 

  • Focused on how emotions and biases can affect decisions

  • States that there are errors in decision-making

  • States that people are NOT rational

  • Explains why investment bubbles, volatility and drastic movements in the stock market occur

Why Should I Care?

  • Psychological biases may cause you to make irrational decisions

  • By knowing these traps, you may be able to avoid them

  • In order to make the best financial decisions, there has to be rationality involved

  • Knowing how to overcome these biases can prompt the making of better investing and financial decisions

ESSENTIAL READS
These are our must-read articles that we HIGHLY recommend will help you develop a strong foundation of behaviorism
Investment Bubbles are created due to over-evaluated prices of an asset, leading to irrational market behavior.
The Recession of 2008 occurred due an investment bubble.
READ MORE
Behavioral Finance is one of the key categories that we offer.
 
This new field analyzes how psychology affects decisions and subsequently, outcomes. 
READ MORE
Mental Accounting involves placing different values on money due to the creation of artificial categories.
 
When unchecked, it
can lead to harming your long-term goals.
READ MORE
The Fear of Missing Out (FOMO) is something we all experience due to our fears of being regretful. 
 
But why is it so detrimental?
READ MORE
Gambler's Fallacy is the idea that past events somehow influence future events-which are independent.
No matter how many times the coin flips tails, don't count on it giving heads.
 READ MORE
Herding occurs when an individual, rather than using their own rational, follows a large group of people under the underlying assumption that others must be right. 
READ MORE
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