Investor Behavior : The Psychology of Financial Planning and Investing

by Baker, H. Kent; Ricciardi, Victor

• ISBN13: 9781118492987
• ISBN10: 1118492986
• Edition: 1st
• Format: Hardcover
• Copyright: 2014-02-10
• Publisher: Wiley

Summary

Investor Behavior will provide readers with a comprehensive understanding and the latest research in the area of behavior finance and investor decision making. Blending contributions from both scholars and practitioners, the book will provide investment professionals with insights on how to understand and manage client behavi∨ a framework for interpreting financial market activity; and a in-depth understanding of this important new field of investment research. The book will cover the major principles of behavioral finance, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion behavior. Specific sections of the book will delve into the role of personality traits, cultural factors, and emotional well-being in investment decisions. Other topics covered include risk perception and tolerance; asset allocation decisions under inertia and inattention bias; behavioral portfolio theory, gambling behavior, and neuro-finance. Contributions will delve into the behavioral underpinnings of various trading and investment strategies, including value investing, contrarian investing, and earnings surprises. The final chapters of the book examine new research on ethical investing, socially responsible investing from a behavioral perspective. Empirical evidence and current literature about each type of investment issue are featured. Cited research studies are presented in a straightforward manner focusing on the comprehension of study findings, rather than on the details of mathematical frameworks.

Author Biography

H. Kent Baker is University Professor of Finance and Kogod Research Professor at the Kogod School of Business, American University. He has served on several boards of directors and advisory councils including the Eastern Finance Association and Southern Finance Association, where he is currently the Vice President – Program and President elect.

Victor Ricciardi is a leading expert on the academic literature and emerging research issues in behavioral finance. He is an Assistant Professor of Financial Management at Goucher College. the Coordinator of Behavioral and Experimental Research at the Social Science Research Network (SSRN) at www.ssrn.com, an editor for several SSRN eJournals in the topic areas of behavioral finance, financial history, behavioral economics, accounting history, behavioral accounting, game theory, and decision making under risk and uncertainty.

Table of Contents

Acknowledgments

Part I Foundations of Investor Behavior

1 Investor Behavior: An Overview (H. Kent Baker and Victor Ricciardi) 

2 Traditional and Behavioral Finance (Lucy F. Ackert)

3 Behavioral Economics, Thinking Processes, Decision-Making, and Investment Behavior (Morris Altman)

Part II  Personal Finance Issues

4 Financial Literacy and Education (Michael S. Finke and Sandra J. Huston)

5 Household InvestmentDecisions (Vicki L. Bogan)

6 Personality Traits (Lucia Fung and Robert B. Durand)

7 Demographic and Socioeconomic Factors of Investors (James Farrell)

8 The Effect of Religion on Financial and Investing Decisions (Walid Mansour and Mouna Jlassi)

9 Money and Happiness: Implications for Investor Behavior (Jing Jian Xiao)

10 Motivation and Satisfaction (Lewis J. Altfest)

Part III Financial Planning Concepts

11 Policy-Based Financial Planning: Decision Rules for a Changing World (Dave Yeske and Elissa Buie)

12 Financial Counseling and Coaching (John E. Grable and Kristy L. Archuleta)

13 Financial Therapy: De-biasing and Client Behaviors (Joseph W. Goetz and Jerry E. Gale)

14 Transpersonal Economics (Renée M. Snow)

15 Advising the Behavioral Investor: Lessons from the Real World (Gregg S. Fisher)

16 Retirement Planning: Contributions from the Field of Behavioral Finance and Economics (James A. Howard and Rasoul Yazdipour)

17 Knowing Your Numbers: A Scorecard Approach to Improved Medical and Financial Outcomes (Talya Miron-Shatz and Stephanie Gati)

Part IV Investor Psychology

18 Risk Perception and Risk Tolerance (Victor Ricciardi and Douglas Rice)

19 Emotions in the Financial Markets (Richard Fairchild)

20 Human Psychology and Market Seasonality (Lisa A. Kramer)

21 Neurofinance (Richard L. Peterson)

22 Diversification and Asset Allocation Puzzles (Dimitris Georgarakos)

23 Behavioral Portfolio Theory and Investment Management (Erick W. Rengifo, Rossen Trendafilov, and Emanuela Trifan)

24 Post Crisis Investor Behavior: Experience Matters (Joseph V. Rizzi)

Part V Trading and investing Psychology and Strategies

25 The Psychology of Trading and Investing (Julia Pitters and Thomas Oberlechner)

26 The Surprising Real World of Traders' Psychology (Denise K. Shull, Ken Celiano, and Andres Manaker)  

27 Trading and Investment Strategies in Behavioral Finance (John M. Longo)

Part VI Special Investment Topics

28 Ethical and Socially Responsible Investing (Julia M. Puaschunder)

29 Mutual Funds and Individual Investors: Advertising and Behavioral Issues (John A. Haslem)

30 Real Estate Investment Decision-Making in Behavioral Finance (Eli Beracha and Hilla Skiba)

Answers to the Discussion Questions

Index