Section I A Fast-and-Frugal Approach to Finance
2. Fast-and-Frugal Heuristics
3. Adaptive or Efficient Financial Markets?
4. Financial Regulations and Heuristics
5. When Fast-and-Frugal Works Best
Section II Applications of Fast-and-Frugal Finance
6. Fast-and-Frugal Asset Pricing
7. Fast-and-Frugal Portfolio Theory
8. Fast-and-Frugal Financial Analysis
9. Inference Under the Law of Small Numbers: Earnings Streaks Rather Than Earning Numbers
10. Afterword: A Fast-and-Frugal Finance
A Fast and Frugal Finance: Bridging Contemporary Behavioural Finance and Ecological Rationality adds psychological reality to classical financial reasoning. It shows how financial professionals can reach better and quicker decisions using the ‘fast and frugal’ framework for decision-making, adding dramatically to time and outcome efficiency, while also retaining accuracy. The book provides the reader with an adaptive toolbox of heuristic tools and classification systems to aid real-world decisions. Throughout, financial applications are presented alongside real-world examples to help readers solve established problems in finance, including stock buying and selling decisions, even in situations of considerable uncertainty and risk.
The book concludes by describing potential solutions to financial problems, including discussions on high frequency trading and machine learning algorithms.
- Demonstrates how well-constructed ‘fast and frugal’ models can outperform standard models in time and outcome efficiency
- Focuses on how financial decisions are made in reality rather than how they should be made
- Discusses how cognition and the decision-making context interact in producing ‘fast and frugal’ choices
- Explores the development of decision-making trees in finance to aid in decision-making
Graduate students studying for a degree in finance, accounting, or economics that include a course in behavioral finance or finance, and early career researchers conducting primary research in behavioral finance. Professionals, including finance managers, financial controllers and treasurers
- No. of pages:
- © Academic Press 2020
- 1st December 2019
- Academic Press
- Paperback ISBN:
Dr. William Forbes is a visiting Professor of Economics at Waterford Institute of Technology, Ireland and Groningen University, Netherlands. Forbes has researched and taught upon behavioural finance for nearly twenty years. Previously he has worked in Exeter, Manchester, Glasgow and Loughborough Universities.
Waterford Institute of Technology, Ireland and Groningen University, The Netherlands
Dr. Aloysius Igboekwu is a Lecturer in Finance and the Director of Postgraduate Studies at Aberystwyth Business School, Aberystwyth University, United Kingdom. He holds a PhD from Loughborough University in the United Kingdom. His research interests are in the areas of Asset Pricing, Behavioural Finance, Corporate Finance and Governance, Market-based Accounting, Financial Markets, International Economics, and Banking. He has published in international journals such as the Review of Quantitative Finance and Accounting. Aloysius has presented his research works in a number of international conferences such as the European Financial Management Association and the British Accounting and Finance Association. He is a reviewer for the Journal of Risk Finance. Currently, he is a guest editor for the Qualitative Research in Financial Markets journal. Aloysius is currently working on a series of applications of Gerd Gigerenzer’s concept of “fast and frugal reasoning” within the financial markets.
School of Management and Business, Aberystwyth University, UK
Dr. Shabnam Mousavi, PhD (Virginia Polytechnic Institute) joined the Johns Hopkins Carey Business School in April 2013. She is a fellow of the Max Planck Institute for Human Development in Berlin (Center for Adaptive Behavior and Cognition), as well as a Network member of the University of Chicago Wisdom Project (Grant recipient, 2008). She has served on the faculty of statistics at Penn State University and finance at Georgia State and Santa Clara University. Her research is focused on actual decision processes used in daily and professional choice situations, simple and successful heuristic strategies used in complex situations, axiomatic frameworks for rationality and wisdom, Markov chain processes, characterizations of uncertainty, and communication of risk.
Max Planck Institute for Human Development, Berlin, Germany