

Behavioral Finance: Limited Rationality in Financial Markets
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Description
"Behavioral Finance: Limited Rationality in Financial Markets" by Rolf J. Daxhammer and Jörg Ackermann explores how psychological factors and cognitive biases affect financial decision-making and market behavior. The authors challenge the traditional assumption of rationality in financial markets, presenting evidence that investors often act irrationally due to emotions, overconfidence, and herd behavior. The book delves into key concepts of behavioral finance, such as prospect theory, mental accounting, and loss aversion, illustrating how these biases lead to systematic errors in judgment and market anomalies. Through a combination of theoretical insights and real-world examples, Daxhammer and Ackermann provide a comprehensive understanding of the interplay between psychology and finance. Their work highlights the importance of recognizing and mitigating these biases to make better investment decisions and improve market efficiency.