The Financial Consequences of Behavioural Biases An Analysis of Bias
This book provides a concise analysis of behavioural biases and their implications for financial decision making. The book is written in the normative tradition, arguing strongly for the superiority of behavioural finance with respect to explaining observ
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Imad A. Moosa Vikash Ramiah
The Financial Consequences of Behavioural Biases
Imad A. Moosa · Vikash Ramiah
The Financial Consequences of Behavioural Biases An Analysis of Bias in Corporate Finance and Financial Planning
Imad A. Moosa School of Economics, Finance and Marketing RMIT Melbourne, VIC, Australia
Vikash Ramiah School of Commerce UNISA Adelaide, SA, Australia
ISBN 978-3-319-69388-0 ISBN 978-3-319-69389-7 (eBook) https://doi.org/10.1007/978-3-319-69389-7 Library of Congress Control Number: 2017956907 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed 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. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © Stephen Bonk/Fotolia.co.uk Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
To the Memory of Tony Naughton
Preface
The global financial crisis has forced a rethinking of the principles of neoclassical finance, particularly the efficient market hypothesis, and enhanced confidence in the alternative paradigm of behavioural finance and its extensions. Numerous books have been written about behavioural finance and various biases, as well as several surveys of the literature. A question that arises then is why we decided to write yet another book, given that the subject matter has been dealt with extensively. We believe that by writing this book, we will contribute to the literature in several ways. To start with, we discuss extensively the issue of conspiracy theory and how behavioural biases lead to belief in conspiracy theory, an issue that is hardly mentioned in existing books and literature reviews. We even identify the biases that lead to belief in conspiracy theory and make a judgment as to why this belief is not al
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