KBC Invest 2019: Adding up the benefits of behavioural economics

KBC Invest 2019: Adding up the benefits of behavioural economics View Gallery

Behavioural economics accepts that humans are both rational and emotional in their choices, and recognises that when it comes to investment decisions, emotions can matter as much as money

Financial decision-making theory was once the domain of the classicists, the post-war number crunchers who placed investors and investor behaviour into strict categories. Then, along came Daniel Kahneman, whose Thinking Fast and Slow fused psychology with economic science, and Richard Thaler, the Nobel prize-winning father of ‘behavioural economics’, who established that people are predictably irrational in the way they defy economic theories.

But what is behavioural economics, and how can it benefit the average investor?...

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