Representativeness and Investment Decision Making
Journal Title: IOSR journal of Business and Management - Year 2018, Vol 20, Issue 2
Abstract
Representativeness is one of the most common cognitive errors surveyed by Behavioural Finance researchers. It demonstrates the investors’ tendency to misinterpret the probability of an event or a series of events and associate this probability with random non-relevant situations when investment decisions have to be made. The present paper discusses the effect of representativeness both on everyday life and the stock market. In addition, it discusses the factors affecting the specific cognitive error, and also ways to address it in order to facilitate rational investment decisions and, thus, establish equilibrium in the stock market.
Authors and Affiliations
George Konteos, Anastasios Konstantinidis, Konstantinos Spinthiropoulos
Keywords
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- EP ID EP409642
- DOI 10.9790/487X-2002050510.
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