Question

Contribute a Wiki on the topic: What can behavioural finance teach us about finance?

Answer 1

Behavioural Finance is not a recent development in the finance there are many studies on that. Behavioural finance is very important topic in finance non a days. It is a combination of finance and human psychology which talk about how human will react with his portfolio in the different market conditions. It is very hot topic there are many researches which won Nobel Prize while studying on the behavioural finance.

In few of the examples are related to human behaviour where if someone is holding one stock which is going down he will not sell that stock in expectation of stock will recover in future, where as at the same time one whose stock is going up will try to close its position as soon as possible.