Year: 2008
Type: book-chapter
Abstract: A large body of empirical and experimental literature provides convincing evidence of the complexity of individual and institutional investor behaviour in market environments.This complexity raises serious questions regarding the effectiveness of current systems of investor protection regulation, which are largely based on the rational investor model.This chapter considers the whole spectrum of cognitive biases that affect investor decision-making and the impact of investor behaviour on market welfare.It also highlights the failure of current systems of investor protection regulation to devise techniques capable to counter the distorting impact of cognitive biases.In order to enhance the credibility of the behavioural critique, the chapter proposes a realistic and workable framework for reform, which, if implemented, would lead to effective debiasing.
Author: Emilios Avgouleas
Institution: University of Edinburgh
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2118761193