Psycological Biases of Investors

Authors

  • H. Kent Baker American University
  • John R. Nofsinger Washington State University

DOI:

https://doi.org/10.61190/fsr.v11i2.4726

Keywords:

Behavioral finance, Investor Psychology

Abstract

We review the field of behavioral finance as it relates to investors. Specifically, we examine common investment mistakes caused by an investors' cognitive and emotional weaknesses and group these mistakes into two categories: how investors think and how investors feel. Although most recent research deals with these psycological influences in investor decision-making, we also discuss social factors that affect financial decisions. We suggest five steps that investors can take to help overcome common mistakes. FInally, we present some thoughts on further behavioral research involving investors.

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Published

2002-06-30

How to Cite

Baker, H. K., & Nofsinger, J. R. (2002). Psycological Biases of Investors. Financial Services Review, 11(2), 97–116. https://doi.org/10.61190/fsr.v11i2.4726

Issue

Vol. 11 No. 2 (2002): FSR Summer 2002

Section

New Original Submission

License

Copyright (c) 2002 Academy of Financial Services

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