Week 8_09 - Behavioral Finance

Week 8_09 - Behavioral Finance - Behavioral Finance...

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Behavioral Finance Practical Topics in Investment Management
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Practical Topics in Investment Manageme 2 Markets are made up of people; so we need to understand people in order to understand markets.
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Practical Topics in Investment Manageme I can; can you? fi yuo cna raed tihs, yuo hvae a sgtrane mnid too! Cna yuo raed tihs? i cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. it dseno't mtaetr in waht oerdr the ltteres in a wrod are, the olny iproamtnt tihng is taht the frsit and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it whotuit a pboerlm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Azanmig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt! 3
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Practical Topics in Investment Manageme Your Eyes Can Trick You 4
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Practical Topics in Investment Manageme 5 20 th Century: Modernism, Reflexivity, and the birth of Psychology as Science Skinner, Pinker and other bad hairdos 1900 Academia: It’s all culture! Skinner: It’s all instinct! Pinker: It’s Both! Emotion & Reason
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Practical Topics in Investment Manageme The End of Classical Economics “Homo Economicus”: or Economic man : the theory of humans as rational and self-interested actors who desire wealth, avoid unnecessary labor, and have the ability to make judgments towards those ends… …Replaced by the Modern Caveman! 6
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What Would you Do? A disease is expected to kill 600 people. Government officials have produced two options: A. 200 people will be saved. B. A 33% chance that all 600 people will be saved and a 66% chance no one will. 72% of people chose A, 28% B.
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This note was uploaded on 04/05/2009 for the course UGBA 137 taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

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Week 8_09 - Behavioral Finance - Behavioral Finance...

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