The Psychology of Investing

Traditional finance has focused on developing the tools that investors use to optimize expected return and risk. Understanding the motivations behind this behavior is extremely important when applying these financial tools. This is the first text of its kind to delve into the fascinating and important subject of the psychology affecting investments!

• Behavioral knowledge—Draws from psychology, management, marketing, economics, and finance.
  Students can easily understand the relevance, use, and importance of the material presented across different business disciplines.
• Examples of psychological biases—Illustrated with examples of everyday behavior, and the effect of psychological biases on investment decisions is then described.
  Shows students bow to overcome their biases to increase their wealth!
• Both investment as well as non-investment examples—Used throughout the text to illustrate how different concepts relate to investing.
  This approach first helps students see how the behavior covered relates to everyday life and then ties the behavior to investment decisions.