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Opinion: Inside View - The psychology of investing.
From: Pensions Week
Date: 20021028
Author:
The fundamental difference between classical finance and behavioural finance is that the former is concerned with how people should behave, while the latter has an empirical basis in that it is focused on how people actually do behave in the real world. In the world of classical finance individuals are rational risk-averse profit maximisers. In reality, individuals do not behave like the rational man of university economics text books. Indeed "of all the ways of defining man, the worst is the one which makes him out to be a rational animal" - Anatole France. Behavioural theorists ...
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