Financial Education

Traditional finance theory assumes that investors act rationally to maximize profit. Behavioral finance considers how psychological traits may affect how investors act individually or in groups.

Although there is no unified theory of behavioral finance, practitioners attempt to identify anomalies that can be explained by investor behavioral traits, and to identify opportunities to profit from exploiting the biases of other investors.

For more information, see all articles on: Behavioral Finance

See also:

Escalation Bias

Prospect Theory

Overconfidence and Confirmation Bias

How Psychological Profiling Can Be Used to Understand Individual Investor Behavior

The Behavioral Finance Investment Framework