Behavioural Finance and Investment Advice

By January 23, 2021Thorsten Hens

Kremena Bachmann

University of Zurich – Department of Banking and Finance; Zurich University of Applied Sciences

Thorsten Hens

University of Zurich – Department of Banking and Finance; Norwegian School of Economics and Business Administration (NHH); Swiss Finance Institute

Abstract

Behavioural finance studies the psychological factors that influence financial behaviour both on the level of the individual as well as on the level of the market. So far these results have been mainly used to explain the existence of patterns in asset prices and to develop investment strategies that exploit them. While these applications of behavioural finance aim to understand the market, this chapter focuses on the individual investors and asks how to advise behavioural investors helping them make optimal investment decisions.

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