Chronic Regulatory Focus and Financial Decision-Making Asset and Por
In this book, the relationship between financial decision-making and chronic regulatory focus is explored to provide a better understanding of consumer decisions. Financial decisions are modelled on the basis of assets and portfolios sensitive to particul
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Navin Kumar
Chronic Regulatory Focus and Financial Decision-Making Asset and Portfolio Allocation 123
SpringerBriefs in Finance
More information about this series at http://www.springer.com/series/10282
Navin Kumar
Chronic Regulatory Focus and Financial Decision-Making Asset and Portfolio Allocation
123
Navin Kumar Queensland University of Technology Brisbane, QLD Australia
ISSN 2193-1720 SpringerBriefs in Finance ISBN 978-981-287-693-5 DOI 10.1007/978-981-287-694-2
ISSN 2193-1739
(electronic)
ISBN 978-981-287-694-2
(eBook)
Library of Congress Control Number: 2015946593 Springer Singapore Heidelberg New York Dordrecht London © The Author(s) 2016 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. Printed on acid-free paper Springer Science+Business Media Singapore Pte Ltd. is part of Springer Science+Business Media (www.springer.com)
Preface
Behavioural finance explores the various anomalies that exist within financial markets, but does not provide insights into the motivations that drive these phenomena. Merely documenting such phenomena is insufficient, and studying the motivations behind these decisions will provide greater understanding into how and why such occurrences take place. A psychological theory, regulatory focus theory, has been applied to gain insight into the motivations that underlie one’s financial decisions. Regulatory focus theory explores the relationship between the motivation of a person and their means of goal pursuit. Regulatory focus refers to how one approaches pleasure, but avoids pain. There are two regulatory foci, promotion and prevention. The promotion focus is on hopes and accomplishments (gains), and the prevention focus is on safety and responsibility (non-losses). These foci regulate the effects one is exposed to during the decision-making process, thus determining the way one achieves a particular goal. There exists a dominant or chronic regulatory focus and a temporary regulatory focus that can be brought upon by introducing cer
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