Question
Think about the financial theory. Can you relate any of the concepts to how others make financial decisions? Note that even deciding not to invest
Think about the financial theory. Can you relate any of the concepts to how others make financial decisions?
Note that even deciding not to invest in an investment decision, and almost certainly involves some of the biases we have discussed.
Some interesting relationships to explore might be System 1 vs. System 2, loss aversion, prospect theory more generally, the value/cost of investment information, various biases, and heuristics, etc. How do these relate to concepts like risk/return optimization, stock valuation, the equity premium or volatility puzzles, or just financial decision-making in general?
Please explain in detail
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