Baker H.K., Filbeck G., Nofsinger J.R. Behavioral finance: what everyone needs to know

Oxford University Press, 2019. — 256 p.People tend to be penny wise and pound foolish and cry over spilt milk, even though we are taught to do neither. Focusing on the present at the expense of the future and basing decisions on lost value are two mistakes common to decision-making that are particularly costly in the world of finance. Behavioral Finance: What Everyone Needs to Know provides an overview of common shortcuts and mistakes people make in managing their finances. It covers the common cognitive biases or errors that occur when people are collecting, processing, and interpreting information. These include emotional biases and the influence of social factors, from culture to the behavior of one’s peers. These effects vary during one’s life, reflecting differences in due to age, experience, and gender. Among the questions to be addressed are: How did the financial crisis of 2007-2008 spur understanding human behavior? What are market anomalies and how do they relate to behavioral biases? What role does overconfidence play in financial decision- making? And how does getting older affect risk tolerance?Foundations And Psychological Concepts
What Is Behavioral Finance?
Why Is Behavioral Finance Important to Practitioners?
What Are Some Cornerstones Underlying Behavioral Finance?
What Is Prospect Theory and What Implications Does It Have for Choice Behavior?
What Is the Disposition Effect and Why Is It Harmful to Investors?
What Are Heuristics?
What Role Do Heuristics Play in Forming Judgments and Making Decisions?
How Does the Representativeness Heuristic Influence Judgment and Decision-Making Behavior?
What Are Two Common Biases Associated with the Representative Heuristic?
What is the Availability Heuristic and How Can It Affect Investment Decisions?
What Role Does Anchoring Play When Making Investment Decisions?
What Is the Affect Heuristic and How Does It Influence Decision-Making?
What Is Framing and How Can It Influence Decision-Making?
What Role Do Biases Play in Behavioral Finance?
What Role Do Inefficient Markets Play in Behavioral Finance?
What Developments Contributed to the Early Growth and Eventual Acceptance of Behavioral Finance?
How Did the Financial Crisis of 2007-2008 Spur the Relevance of Understanding Human Behavior?
What Are Some Criticisms and Limitations of Behavioral Finance?
Can Investors Exploit Market Anomalies Identified by Behavioral Finance in the Real World?
What insights Does Behavioral Finance Provide into the Volatility Puzzle?
How Can Loss Aversion Help to Explain Investors' Behavior When the Market Goes Down?
Cognitive Biases
What Are Behavioral Biases and Why Are They Important?
What Are Cognitive Biases and Their Major Types?
What Is Conservatism Bias and How Can It Affect Financial Decision-Making?
What Is Confirmation Bias and What Are Its Implications?
What Is Self-Serving Attribution Bias?
What Is Hindsight Bias and What Are Its Implications for Financial Decision-Making?
What Is the Illusion of Control Bias and How Can It Affect Decision-Making?
What is Familiarity Bias and How Does it Manifest itself in Investing?
What Is Framing Bias and How Does It Affect Financial Decisions?
What Is Limited Attention Bias and How Can it Affect Decision-Makers?
What Is Mental Accounting and Why Can It Be Detrimental to Financial Health?
What Is Outcome Bias and What Problems Does It Pose to Investors?
What Is Recency Bias and How Can It Affect Investment Performance?
How Did the Financial Crisis of 2007-2008 Affect Investor Risk Tolerance and Behavioral Biases?
How Do Different Behavioral Investor Types Affect Behavioral Biases?
Does Knowledge of Cognitive Biases Result in Less Biased Financial Decisions?
How Can People Cope with Cognitive Biases in Investment Decision-Making?
Emotional Biases and Social-Cultural Influence
How Do Emotions Play a Role in Investing?
How Do Emotional Biases Differ from Cognitive Biases?
What Is Loss-Aversion Bias and How Does It Affect Decision-Making?
What Is Overconfidence Bias and What Potential Pitfalls Are Associated with It?
What Role Does Overconfidence Play in Financial Decision-Making, Especially Relating to Investment Failure and Possible Errors in Investor Decisions?
What Is Self-Control Bias and How Can It Affect Investment Performance?
What Is Status Quo Bias and Why Do Investors Fall Victim to It?
What Is Endowment Bias as Related to Investors?
What Is Regret-Aversion Bias and How Can It Affect Investors?
How Can Emotions and Moods Affect Investment Decision-Making?
How Can Emotions and Moods Affect Markets?
How Are Emotions Mitigated or Magnified When Making Investment Decisions?
What Are Cultural Biases?
How Do Trust and Home Bias Influence Financial Decision-Making?
How Does Social Interaction Influence People, Especially When Investing?
What Social Role Do Investment Clubs Play in Investing?
How Do Social Identity and Social Norms Influence People, Especially When Investing?
How Does Social Capital Influence People, Especially When Investing?
How Does Attitude Affect Investment Decision-Making?
Do Weather Conditions Influence Investor Decisions?
What Measures Are Available for Gauging Investor Sentiment and Why Is Measuring Investor Sentiment Important?
Investor Behavior
How Can Behavioral Biases Affect Investment Performance?
How Do Overconfidence and Self-Attribution Affect Investor Decision-Making?
How Do the Disposition Effect, Prospect Theory, and Sentiment Influence investors' Behavior?
How Does Limited Attention Affect One's Investing Choices?
Why Do Some Investors Trade Too Much?
What Is Hyperbolic Discounting and Why Is It Important?
Why Do Investors Hold Underdiversified Portfolios?
How Do Personality Traits Affect Investors' Behavior?
How Do Demographic and Socioeconomic Factors Influence Investors?
How Do Behavioral Biases Affect Sophisticated or Knowledgeable Investors?
What Types of Behavioral Biases Influence Professional Investors?
To What Extent Does Mood Affect Investing and Other Financial Decision-Making Behavior?
How Do Social Interactions and Peer Effects Influence Investing Behavior?
How Does Herding Affect Markets?
Should People Invest in the Stock of the Company for Which They Work?
What Biases Lead Investors to Buy or Sell Certain Mutual Funds?
Nudge: The Influence Of Frame Dependence
What Is Frame Dependence?
What Is an Example of Frame Dependence?
How Can Frame Dependence Affect Health Policy?
How Does Framing Affect Investment Risk and Return Assessments?
How Do Decision Frames Affect Investment Predictions?
How Does Framing Affect Retirement Accounts?
Can Frame Dependence Affect Social Security Choices?
How Can Banks Use Frames to Increase Saving?
Can These Savings Programs Use Peer Pressure to Increase Savings?
How Is Frame Dependence Used for Charitable Giving?
How Does the Framing of Return Information Affect Decisions?
What Is the Nudge Revolution?
How Are Framing Concepts Being Used to Lure People into Bad Financial Decisions?
How Did Lenders Use Framing to Nudge Homebuyers into Dangerous Mortgages that Led to the Financial Crisis of 2007-2008?
How Can Employers Use Nudging Concepts to Help Improve Pension Plan Decisions?
Can Nudging Be Effective?
Cognitive Ability
What Are the Cognitive Processes Involved in Investing?
How Does 10 Relate to Investment Success?
What Are the Differences between Analytical and Intuitive Thinking?
How Can Someone's Cognitive Reflection Be Easily Revealed?
How Do Analytical and Intuitive Thinking Relate to Behavioral Finance and Investment Performance?
How Are Better-Trained and More Experienced Investors Likely to Behave?
What Are the Implications of the Cognitive Process Called Theory of Mind?
What Is Cognitive Aging?
Does Cognitive Aging Make Seniors More Susceptible to Financial Fraud?
How Does Getting Older Affect Risk Tolerance?
How Does Cognitive Aging Affect Portfolios?
How Does Cognitive Aging Affect Behavioral Finance?
How Does a Lack of Sleep Affect Cognitive Ability and Financial Decision-Making?
What Is Cognitive Dissonance and How Does It Manifest Itself in Practice?
Do Mora Investment Experience and Competence Reduce Behavioral Finance Problems?