Behavioral finance acknowledges that humans are prone to irrational behavior, especially concerning money matters. This article delves into the fascinating realm of behavioral finance, elucidating how human psychology influences financial decisions. By uncovering the fundamental principles of behavioral finance, readers gain valuable insights to enhance their investment choices and develop robust financial strategies.
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There is nothing rational when it comes to making decisions in our personal lives - a physics prof once said to me that, if rationality were the case, university physicists would all live in better-insulated homes and drive more fuel-efficient cars than the general mass of the population. This is demonstrably not true!
I’ve often wondered about the advantages having of some kind of psychological knowledge/expertise when it comes to understanding economic behaviour.
Do banks and financial institutions employ psychologists for this purpose? I really don’t know.
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i think its kind of important to teach students from school on their psychology and emotional behaviour on the topic of money - sometimes kids just learn from parents who might not set the best example!!
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