BEHAVIORAL BIASES IN TRADING SECURITIES

Abstract

The main thesis of this paper represents the importance and the effects that human behavior has over capital markets. It is important to see the link between the asset valuation and investor sentiment that motivate to pay for an asset a certain prices over/below the intrinsic value. The main behavioral aspects discussed are emotional factors such as: fear of regret, overconfidence, perseverance, loss aversion ,heuristic biases, misinformation and thinking errors, herding and their consequences.

Keywords

• Behavioral finance
• Investor psychology
• Irrationality
• market efficiency
• Behavioral biases
• limits to arbitrage