Research Information System
Reforma, vol.4, no.92, pp.42-48, 2022 (Peer-Reviewed Journal)
Traditional and modern finance theories have not been able to explain
why people did not always make rational decisions. Behavioral finance is
a new field of finance, that recently attracting more attention and
emerged from the view of human beings who do not always act rationally
in their investment decisions. This paper aims to revise the discussion
on behavioral finance as well as to outline its contribution to both
finance and psychology. Moreover, it presents some principles of
behavioral finance such as overconfidence and risk tolerance, and
therefore contributes to the empirical studies in behavioral finance by
using the SEM as (Structural Equation Modeling) approach.