Behavioral Finance
A field of finance that proposes psychology-based theories to explain stock market anomalies. Within behavioral finance it is assumed that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes.
Investopedia Commentary
There have been many studies that have documented long-term historical phenomena in securities markets that contradict the efficient market hypothesis and cannot be captured plausibly in models based on perfect investor rationality. Behavioral Finance attempts to fill the void.
Related Links
Taking A Chance On Behavioral Finance
Financial Concepts
Trading Volume - Crowd Psychology
The Madness Of Crowds
What Is Market Efficiency?
See also: Behavioral Economics, Efficient Market Hypothesis (EMH), Lemming
Also spelled: behavioural finance