The Financial Consequences of Behavioural Biases

An Analysis of Bias in Corporate Finance and Financial Planning

Imad A. Moosa, Vikash Ramiah

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN: 9783319693880
• eBook ISBN: 9783319693897
• Topic: Business
• Subtopic: Finance
• Index: Business

This book provides a concise analysis of behavioural biases and their implications for financial decision making. The book is written in the normative tradition, arguing strongly for the superiority of behavioural finance with respect to explaining observed phenomena in financial markets. It offers some unique features, including a discussion of the issue of conspiracy theory and how behavioural biases lead to belief in conspiracy theories. Lingering belief in the principles of neoclassical finance is attributed in part to the doctrine of publish or perish, which dominates contemporary academia. The offshoots of behavioural finance are discussed in detail, including ecological finance, environmental finance, social finance, experimental finance, neurofinance, and emotional finance. A comprehensive discussion of narcissism is presented where it is demonstrated that narcissistic behaviour is prevalent in the finance industry and that it led to the eruption of the global financial crisis.

Table of contents

• Preface
• Contents
• Abbreviations
• List of Figures
• List of Tables
• 1 The Rise and Fall of Neoclassical Finance
• 2 The Rise and Rise of Behavioural Finance
• 3 Overconfidence and Self-Serving Bias
• 4 Loss Aversion Bias, the Disposition Effect and Representativeness Bias
• 5 Other Biases in the Behavioural Finance Literature
• 6 Recent Developments
• 7 Epilogue
• Glossary of Behavioural Biases
• Index