Human Behaviour and Financial Trading

June 2001

Speaker:

Professor Daniel Kahneman, Princeton University

Psychologist Daniel Kahneman has studied decision-making for over three decades. In recent years, he has also turned his attention to investment decision-making, a field that is now known as behavioural finance. He found that when investors are faced with a sea of information, their existing biases cause them to circumvent the decision-making process, which can lead to poor investment choices.

The field of behavioural finance attempts to better understand and explain how emotions and cognitive errors influence investors and the decision-making process. Many researchers believe that the study of psychology and other social sciences can shed considerable light on the efficiency of financial markets as well as explain many stock market anomalies, market bubbles, and crashes.

"Psychology has a story to tell about investing, and it's different from the one economics tells," says Princeton psychologist Daniel Kahneman, Ph.D.

Professor Kahneman is a member of the American Academy of Arts and Sciences and a fellow of the American Psychological Association, the American Psychological Society, the Society of Experimental Psychologists, and the Econometric Society. He has been the recipient of numerous awards, among them the Warren Medal of the Society of Experimental Psychologists (1995), and the Hilgard Award for Career Contributions to General Psychology (1995).

Panelists:

Simon Elimelakh, Rothschild Asset Management
Professor Michael Vitale, AGSM

Resources:

Overhead – “Psychology, Risk and Investment”