Emerging Research and Policy Issues in Behavioral Finance (Presentation Slides)

Deborah Gregory
Bentley University – Department of Finance

Victor Ricciardi
Goucher College – Department of Business Management

September 18, 2015

Seventh Annual Meeting of the Academy of Behavioral Finance & Economics, September 2015

Behavioral Finance
Image source: YouTube Video Screenshot

Abstract:

This is a PDF file of ‘Emerging Research and Policy Issues in Behavioral Finance” slides from a presentation at the Seventh Annual Meeting of the Academy of Behavioral Finance & Economics, September 16-18, 2015, Drexel University Philadelphia, Pennsylvania.

This special session provided conference attendees a presentation and discussion of emerging issues in behavioral finance.

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Emerging Research And Policy Issues In Behavioral Finance

  • Behavioral finance hypotheses
    • Framing issues
    • Mental accounting
    • Subconscious decision-making and affective reactions
    • Motivation
  • Behavioral CAPM and behavioral portfolio theory
  • Financial Sustainability and Social Investing: Can behavioral finance develop an alternative to shareholder maximization?
    • Impact Investing
    • Concept of “fiduciary capitalism”
  • Social Psychology: The role of risk-taking and group behavior.
    • Risky Shift Effect
    • Groupthink and the Delphi Method
    • Change in the sociological frame since 2008
  • Role of gender, culture, ethnicity, religion
  • Financial therapy and investor (money) personality.
    • Role of trust
  • Financial Literacy
    • The Performance Gap: Investor education and poor investment performance (Source: Dalbar report)
    • Role of age in financial decision-making
    • Role of emotional intelligence
  • Nudging Policy
    • Behavioral finance conference hosted by the RAND Corporation each year demonstrates a wide range of governmental nudging programs and policies.
    • What type of framework and guidelines should be created to assess the implementation of nudging policies by the government?
    • Prize-linked savings accounts (lottery-linked accounts).
    • Is nudging and retirement savings a good idea?
      • What influence would investor education and a required meeting with a financial planner have?
  • Perceptions of the “market”
    • What/who constitutes the market? Where is the power?
    • Role of algorithmic trading
  • The inverse relationship between perceived risk and return
  • The relationship between risk tolerance and risk perception
  • Compare two different research groups
  • “Status Quo Investors” versus “Overconfident Investors”
  • What behavioral biases are unique to specific financial services and investment products?
  • Application: What are strategies for overcoming biases?
  • Survey overview from literature covering different branches of behavioral finance
  • Need for academic articles and books on research methods in behavioral finance.
    • E.g., Kent Baker published the first book in 2010 on survey research and corporate finance.
  • Behavioral accounting has a wonderful body of knowledge on behavioral research methods within an accounting setting from the late 1960s and early 1970s.
    • An under-utilized research approach in behavioral finance is the notion of replication.

See the full slides below.