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Behavioural Finance: The psychological impact and overconfidence in financial markets
University of Skövde, School of Technology and Society.
2008 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Purpose

The main purpose of this paper is to investigate overconfidence and over-optimism in the market. This leads the reader to the question, are the analysts “right” concerning their forecasts? The reader will also get to understand various and sometimes forgotten factors that affect we human beings in our decision making when it comes to investing and analysing which is also known as the behavioural finance theory.

Conclusion

According to the results from my tests it seems that analysts of the S&P500 are exaggerated by the problem of overconfidence and the over-optimistic biases. The analysis part of this study is confirming the discussed theory of anchoring and herding. Analysts tend to “follow the stream”, by evaluate the standard deviations between forecasts and the realized outcome, as well as the indexed analysts’ consensus estimations for twenty-four months of EPS.

Place, publisher, year, edition, pages
Skövde: Institutionen för teknik och samhälle , 2008. , 57 p.
Keyword [en]
Behavioural finance, Overconfidence, Over-optimism, Cognitive psychology, Irrational markets, Econophysics
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:his:diva-1326OAI: oai:DiVA.org:his-1326DiVA: diva2:2468
Presentation
(English)
Uppsok
samhälle/juridik
Supervisors
Examiners
Available from: 2008-08-14 Created: 2008-08-14 Last updated: 2009-06-17

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf