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Behavioral Finance Guide

 , updated on October 03, 2016
Behavioral finance is an approach to modeling markets that considers human cognitive factors. Standard economic models view markets as perfect information processing machines that always efficiently price assets and securities. This differs from the common observation that prices often seem irrationally high or low due to excessive enthusiasm or fear. Behavioral finance focuses on inefficiencies such as errors of logic, herd behavior and emotional decisions that cause inaccurate prices. The following are core concepts of behavioral finance.
Animal Spirits
Bounded Rationality
Bull Trap
Capitulation
Cognitive Biases
Concept Company
Dumb Money
Falling Knife
Fear Of Missing Out
Freeriding
Greater Fool Theory
Greed Is Good
Herd Behavior
Home Bias
Irrational Exuberance
Logical Error
Long Squeeze
Mr Market
Noise Traders
Sell On News
Smart Money
Speculation
Speculative Bubbles
Wealth Effect
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The definition of risk taking with examples.

Risk Examples

A list of risk examples by type.

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The two main factors in modeling a risk.

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Relative Risk

How to calculate relative risk with examples.

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