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Investor Irrationality and Self-Defeating Behavior: Insights from Behavioral pay Sudhir Singh, prof of Finance and Associate Dean, College of Business, Frostburg State University ABSTRACT The efficient trades guess (EMH) has posited investment decision-makers as rational, utility-maximizing individuals. Cognitive psychology, on the other hand, suggests that tribadistic decision processes ar susceptible to sev successionl illusions: those caused by heuristic rule decision-making processes, as vigorous as those arising from the adoption of mental frames. Unfortunately, these heuristics whitethorn lead to cognitive illusions that include: re bear witnessativeness, all over-confidence, anchoring, gamblers fallacy, passage aversion, regret aversion, and mental accounting, among others. Behavioral pay proponents argue that heuristic-driven twine and framing prepares cause market prices to deviate from ingrained values. This field amalgamates theories from financia l economics, psychology, and sociology in an seek to construct a more complete model that incorporates the idiosyncrasies of human behavior in financial markets. This paper argues that understanding of the findings of this search benefits individual investors the intimately as it seeks to create awareness of the mingled human biases and the high cost they impose on their portfolios.

INTRODUCTION The pause of the dot-com era of the late nineties and the continuing present anxiety over stock market performance has had a sobering effect on investors and warranted a revisiting of the rules of investing . Following the blasting events surrounding ! the bursting of the speculative technology bubble in establish 2000 and the real earth bubble in September 2008,, refreshed attempts are be made to explain the behavior of financial markets, one of the maiden of which is in the area of behavioral finance. wager in behavioral finance research has been fueled by the inability of the traditional finance...If you want to get a rise essay, order it on our website: BestEssayCheap.com

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