Behavioral
finance and its impact on decision-making - Finance Not Taught In School
Behavioral
finance studies often not taught in school, explores how psychological biases
influence financial impact investment choices, often deviating from rational
economic models. Common biases include loss aversion, overconfidence, and herd
mentality. These biases can lead to suboptimal decisions, such as buying high
during market euphoria or selling low in panic.
Understanding
behavioral finance helps investors recognize and mitigate these biases,
promoting more informed and disciplined decision-making. By acknowledging the
human element in finance, individuals can better navigate markets and achieve
their long-term financial goals decision-making. It explores how emotions,
cognitive errors, and social factors affect financial decisions.
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