Psychological Drivers of Herding and Market Overreaction

Download or read book Psychological Drivers of Herding and Market Overreaction written by Loang, Ooi Kok and published by IGI Global. This book was released on 2024-11-29 with total page 380 pages. Available in PDF, EPUB and Kindle. Book excerpt: The psychological drivers of herding behavior and market overreaction shape current financial markets, often leading to price volatility and mispriced assets. Investors who are influenced by emotions may copy the actions of others, resulting in collective decision-making that can amplify market trends. This phenomenon is further influenced by cognitive biases, such as confirmation bias and overconfidence, which can cloud judgment and lead to irrational excitement or panic selling. Understanding these psychological mechanisms is essential for investors and market analysts alike, as it provides insights into the dynamics of market behavior and contributes to more informed investment strategies and risk management practices. Psychological Drivers of Herding and Market Overreaction explores the psychological factors that drive herding behavior and market overreaction in financial markets. It integrates key psychological theories with financial market analysis to explain why investors follow the crowd and how these collective behaviors impact market stability. This book covers topics such as collective intelligence, financial markets, and herding behavior, and is a useful resource for computer engineers, psychologists, marketers, business owners, economists, academicians, scientists, and researchers.