The Jekyll-and-Hyde transformation of male traders

brokersfin

The Biological Component of Behavioral Finance

Behavioral finance, which is often used to explain irrational moves in financial markets, emphasizes the importance of psychological influences on investor behavior. The work of researchers, including Nobel Prize winner Daniel Kahneman, has examined those influences to provide useful insights that help with better decision making. However, focusing on only the psychological drivers of irrational behavior may overlook important biological components that also destabilize financial markets. Irrational decisions, loss aversion, and mispriced risk have been linked to hormones found in the human body. These chemical messengers coordinate fight, flight, mating, feeding, and the struggle for status, and they have an impact on growth, metabolism, immune function, mood — and perhaps most importantly — memory, cognition, and behavior. ….[READ]

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s