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QUESTION ONE [ 2 0 Marks ] Write short notes on the following I. Choice bracketing II . Anchoring III. Hindsight bias @ 4 Marks

QUESTION ONE [20 Marks]
Write short notes on the following
I. Choice bracketing
II. Anchoring
III. Hindsight bias
@4 Marks
IV. Narrow framing,
V. Familiarity
QUESTION TWO [20 Marks]
Part a [4 Marks]
Explain the relationship between momentum and attitude to risk.
Part b [16 Marks]
How can market overreaction and underreaction be explained by Behavioural finance?
QUESTION THREE [20 Marks]
Part (a)10 Marks
Psychological research has indicated that there is a relationship between individuals' saving behaviour, their personality traits and self-control. Discuss the key findings of the papers published by the following authors:
i. Puri and Robinson (2007)- Optimism and economic choice. Journal of Financial Economics 86,71-99
ii. Thaler and Shefrin (1981)- An Economic Theory of Self Control. Journal of political Economy, Vol 89(2),392-406
iii. Choi, Laibson, Madrian and Metrick (2001), Defined Contribution Pensions: Plan Rules,Participant Choices, and the Path of Least Resistance. Tax Policy and the Economy, Vol 16. MIT Press
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v. Tice et al.(2001). Emotional Distress Regulation Takes Precedence Over Impulse
Control: If You Feel Bad, Do It! Journal of Personality and Social Psychology, Vol. 80, No.1,53-67
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