Behavioral finance is the study of the combination of behavioral and cognitive psychological theory with conventional economics and finance. The influence of emotion and psychology on investors subsequently affects the financial markets. Irrational or unpredictable human emotion is a key driver of the market. There is evidence that individuals typically make illogical decisions when they spend, invest, save and borrow money. Behavioral finance research has made important, relevant contributions to retirement saving and investing. This research displays an innovative perspective on participant behavior and its basis. Education and communication programs alone may not be effective in changing retirement planning behavior.
Linda G. Watson. "Behavioral Finance and Retirement Preparedness: Road to Financial Security and Well-Being." Proceedings of the New York State Economics Association. vol. 5, October 2012, p. 255-262
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