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behavioral finance

a field, closely related to behavioral economics, that studies the impact of emotion, cognitive biases, and other psychological factors on financial decision making and hence on financial markets. In particular, behavioral finance emphasizes the role such factors play in irrational investment behavior (e.g., under- or overreaction to financial information) and its consequences in market fluctuations (e.g., financial bubbles, panics). See also mental accounting.

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Psychology term of the day

November 23rd 2024