What corporations can learn from behavioural finance

Behavioural finance, as a complement to traditional finance has long been trying to understand how people make decisions. This with the goal to eventually help investors improve their economic results, speak make their portfolios more efficient in the sense of modern portfolio theory (or put simply, make more money for given risk). The discipline, borrowing from psychology, has uncovered numerous biases that distort people’s decision making, typically to their detriment. Now then, there are lots of fruits to harvest from those studies, not only for professional investors and traders, but equally for the Sunday afternoon private want-to-be stock market player or the corporate citizen involved in day-to-day projects in their company. Continue reading