You will review your classmates’ initial postings and choose one classmate to complete the following for your reply:
Write a 250 to 300-word response to your classmate. Your reply must make a recommendation to your classmate of a peer reviewed journal article that provides additional information on their topic. In your response, you should give a summary of the article in your own words and discuss why it is relevant to their forum topic. It must be different than articles they reference in their forum. Include an APA formatted citation at the bottom of the reply.
DNA analysis and financial behavior
Accumulation of debt, specifically credit card, may be attributed to diminished MAOA genetic capability (De Neve, J. & Fowler, J., 2014). This premise is rooted in the understanding that MAOA undermines the neurotransmitters responsible for the regulation of impulsive behaviors (Abdallah, K., et al. 2020, De Neve, J. & Fowler, J. 2014), including financial decisions that result in the accumulation of costly credit card debt and adverse outcomes such as bankruptcy and interpersonal relationship strain (Dibb, S., et al. 2018). Although there are arguments to be made for the environmental influence upon personal debt accumulation, the focus of this research will be on its genetic and behavioral drivers.
De Neve, J. & Fowler, J. (2014) argue that the MAOA gene negatively impacts serotonin function, critical for impulse control, thus creating a pronounced association with the need for reward. Keeping Up with the Joneses is both common phraseology and a construct used to describe the acquisition of something material to elevate one’s status to match that of a peer. The argument is elaborated by stating that there is intrinsic value in the display of an acquisition, thereby affirming an elevated social standing (Siegel, L. & Wang, D., 2018). The authors add that the millennial generation further perceives experiences as valuable to advancing social status, even over material goods in some cases. The pursuit of Keeping up with the Joneses presents complications when considering income disparity (Fligstein, N., et al., 2017). The authors add that the cost of goods associated with an elevated status are more burdensome for those facing income disparity because of consumer demand and bidding: defined in this context as a compulsion for lower income populations to pay for goods in lieu of elevated prices set by higher income earners. As a result, those facing income disparity who elected to consume the goods, as opposed to those who abstained, acquired deeper debts. Armantier, O., et al., (2022) adds that inflation only exacerbates this disparity in income, making it more challenging for lower income earners to achieve a particular social status, and subsequently more likely to become indebted, and experience feelings of deprivation.
Keeping Up with the Joneses consists of a persistent cycle of preserving and elevating one’s lifestyle. As indicated, this act often comes at a considerable cost to the individual, resulting in potentially negative consequences including, but not limited to indebtedness. Although personal choice (Fligstein, N., et al., 2017) is a component to impulsive behaviors such as spending, De Neve, J. & Fowler, J. (2014) offer the notion that impulsive borrowing could be curbed if lenders considered genotype in their decisions. This solution fits the authors’ overall argument that impulsive acts of spending, as characterized by Keeping Up with the Joneses, is the result of a behavioral deficiency instead of environmental factors. The conclusion that genetic attributes contribute in part or whole to impulsive spending, and a willingness to accumulate debt, warrants further research. Specifically, the known effects of MAOA on impulsive behaviors gives research ample cause.
Abdallah, K., Bittar, T., Checknita, D., Cote, G., Gigek, C., Golden, S., Labonte, B., Lopez, J., Maussion, G., Meaney, M., Mechawar, N., Navarro, L., Nestler, E., Neve, R., Quessy, F., Russo, S., Turecki, G., Yang, J. & Yerko, V. (2020). Regulation of impulsive and aggressive behaviours by a novel lncRNA, Molecular Psychiatry, 26, 3751-3764. https://doi.org/10.1038/s41380-019-0637-4.
Armantier, O., Filippin, A., Neubauer, M. & Nunziata, L. (2022). The expected price of keeping up with the Joneses, Journal of Economic Behavior & Organization, 200, 1203-1220. https://doi.org/10.1016/j.jebo.2020.07.022.
De Neve, J. & Fowler, J. (2014). Credit card borrowing and the monoamine oxidase A (MAOA) gene, Journal of Economic Behavior & Organization, 107, 428-439. http://dx.doi.org/10.1016/j.jebo.2014.03.002.
Dibb, S. Fenton-O’Creevy, M. & Furnham, A. (2018). Antecedents and consequences of chronic impulsive buying: Can impulsive buying be understood as dysfunctional self-regulation? Psychol Mark, 35, 175-188. https://doi.org/10.1002/mar.21078.
Fligstein, N., Goldstein. A. & Hastings, O. (2017). Keeping up with the Joneses: How Households Fared in the Era of High Income Inequality and the Housing Price Bubble, 1999–2007. Socius: Sociological Research for a Dynamic World, 3, 1-15. https://doi:10.1177/2378023117722330.
Siegel, L. & Wang, D. (2018). Keeping up with the joneses: Emergence of travel as a form of social comparison among millennials. Journal of Travel & Tourism Marketing, 36(2), 159-175. https://doi.org/10.1080/10548408.2018.1499579.
Behavioral Finance: Investor Data and Behavior
Investor data and behavior have always interested finance professionals and researchers. Behavioral finance focuses on the psychological and emotional variables that influence investor decisions and has increased in prominence in recent years. Investors may not always make sensible judgments; their actions and emotions may substantially impact their investments. We can learn much about how investors make judgments and why they occasionally make poor decisions by looking at these characteristics. This knowledge can assist us in creating strategies to overcome these biases and enhance the performance of our investments. Behavioral finance emphasizes the value of considering human behavior when making financial decisions and provides an engaging framework for investigating the interesting and frequently unpredictable realm of investment psychology.
How Investor Data Affects Behavior
Investors consider various factors, including market trends and the performance of their investments, in line with their financial objectives to make decisions. Similar to other factors affecting it, such as perception and experience, accessibility of investment data contributes substantially to determining investment behavior (Adil et al., 2022). Investors who examine historical data on market trends and individual investments can make informed investment decisions. By utilizing this data to identify patterns and trends in investor behavior, financial professionals can enhance their ability to develop more effective investment strategies.
The Role of Emotions in Investment Decisions
Emotions majorly affect the investor's actions which influence decisions made in finance. For instance, greed and fear are some of the emotions identified that influence investment decisions. Concerned investors may sell off their investments before the right time due to fear of financial loss leading to considerable losses (Kumari et al., 2022). However, overconfidence in one's ability may lure inexperienced or even experienced investors into taking risks beyond their means (Abdesslem et al., 2022). This can eventually lead to significant monetary loss.
Herd Behavior and Its Consequences
Investors that engage in herd behavior prefer to mimic the conduct of others versus coming to their independent conclusions. Numerous things can motivate this behavior, including the need to fit in, the worry about missing out on chances, and the impact of the media and other information sources (Gupta & Shrivastava, 2022). However, herd behavior can have serious repercussions when it results in bubbles and market crashes. By understanding the factors that contribute to herd behavior, financial professionals can develop strategies to mitigate its impact.
How to Make Better Investment Decisions
Making better investment decisions requires a comprehensive understanding of investor behavior and its influencing factors. By examining historical data, identifying patterns in investor behavior, and developing effective investment strategies, financial professionals can help investors make more informed decisions (Mittal, 2022). Professionals can also assist investors in controlling their emotions and avoiding herd behavior traps. Making decisions based on sound financial concepts, remaining educated, and remaining objective are ultimately the keys to better investing selections.
Research uncovers many fascinating features of how people behave in ways that impact financial markets as they learn more about behavioral finance. Based on the results of the five studies, several prospective study areas would be worthwhile researching. Future studies may look into how herd behavior affects financial markets. For instance, investor psychology's role in asset pricing. In particular, investors tend to follow the crowd, creating speculative bubbles (Adil et al., 2022). Further research could explore how to prevent the formation of bubbles and how to mitigate their impact on financial markets.
Another area of research could be to examine the impact of stereotypes on risk preferences. Stereotypes may influence financial professionals when predicting risk preferences. Future research could explore how stereotypes affect decision-making in financial markets and how to mitigate their impact. Path dependence on risky choices is another area that warrants further exploration (Gupta & Shrivastava, 2022). Affective and deliberative processes play a significant role in risky decision-making. Further research could investigate how to balance affective and deliberative processes to make better decisions in financial markets.
The impact of technology on individual investor behavior is another area that deserves further attention. Behavioral biases cause individual investors to perform worse than the market (Mittal, 2022). Future research could examine how technology can support people in making better investment decisions as it continues to disrupt financial markets. Emotions significantly impact financial decision-making (Kumari et al., 2022). Further research could investigate how to manage emotions in financial markets to make better investment decisions.
The growing field of behavioral finance could help better understand investor decision-making. As behavioral finance develops, practitioners and scholars must keep up with the latest developments. Investors can make better selections and enhance their overall investment success by being aware of these biases and how they may affect investment decisions. By utilizing the insights offered by behavioral finance, investors can increase their prospects of long-term financial success by making more educated and logical investing decisions.
Abdesslem, R. B., Chkir, I., & Dabbou, H. (2022). Is managerial ability a moderator? The effect of credit risk and liquidity risk on the likelihood of bank default. International Review of Financial Analysis, 80, 102044. https://doi.org/10.1016/j.irfa.2022.102044 Links to an external site.
Adil, M., Singh, Y., & Ansari, M. S. (2022). How financial literacy moderate the association between behavior biases and investment decisions? Asian Journal of Accounting Research, 7(1), 17-30. https://doi.org/10.1108/AJAR-09-2020-0086
Gupta, S., & Shrivastava, M. (2022). Herding and loss aversion in stock markets: mediating role of fear of missing out (FOMO) in retail investors. International Journal of Emerging Markets, 17(7), 1720-1737. https://emerald.com/insight/1746-8809.htm
Kumari, A., Goyal, R., & Kumar, S. (2022). Review on Behavioral Factors and Individual Investors Psychology Towards Investment Decision Making. ECS Transactions, 107(1), 8009. https://doi.org/10.1149/10701.8009ecst
Mittal, S. K. (2022). Behavior biases and investment decision: theoretical and research framework. Qualitative Research in Financial Markets, 14(2), 213-228. https://doi.org/10.1108/QRFM-09-2017-0085 Links to an external site.
Behavioral finance is a multidisciplinary discipline that integrates concepts from psychology, economics, and finance to better understand how individual and group behavior impact financial markets and decision-making processes. The five journal articles offer a variety of viewpoints on behavioral finance in distinct circumstances. Wadhawan and Kulkarni (2022) assess the impact of COVID-19 on behavioral finance, emphasizing how the epidemic affects investor behavior. Ballis and Verousis (2022) investigate the link between behavioral biases and cryptocurrencies, concentrating on the psychological elements of cryptocurrency trading. Verlaine (2022) analyzes the impact of behavioral finance on the architecture of the asset management business, highlighting the importance of investor behavior in influencing the sector's structure. Yasmin and Ferdaous (2023) use a behavioral finance method to explain investor behavior in a given market environment to examine the behavioral biases influencing investment decisions of capital market investors in Bangladesh. Finally, Goel and Rastogi (2023) investigate the influence of borrowers' behavioral and psychological qualities on credit default, presenting a conceptual model that incorporates behavioral aspects into credit risk assessment. These articles highlight the broad applicability of behavioral finance across several areas, giving insights into how psychological biases and behavior impact financial decision-making processes and outcomes. The forum is arranged around the basic issue of behavioral finance, encompassing a wide range of themes such as the influence of external events (e.g., COVID-19), specific financial instruments (e.g., cryptocurrencies), industry structure, and human decision-making in various financial circumstances.
Analysis from five separate studies on behavioral finance reveals some similar themes and contemporary developments in the subject. For starters, there is a common emphasis on the influence of behavioral biases and psychological factors on financial decision-making. Wadhawan and Kulkarni (2022) explain how the COVID-19 pandemic affects investor behavior, indicating the existence of fear and herd mentality as significant behavioral drivers. Similarly, Yasmin and Ferdaous (2023) uncover significant cognitive biases impacting investing decisions in Bangladesh's capital market. Both studies emphasize the importance of psychological variables in affecting investing decisions. Second, the articles discuss the role of behavioral finance in various situations. Ballis and Verousis (2022) investigate the behavioral elements of bitcoin trading, discovering herding tendency and overconfidence among cryptocurrency investors. This is consistent with Wadhawan and Kulkarni's (2022) findings, which indicate that behavioral biases endure throughout financial markets. Furthermore, Verlaine (2022) investigates the influence of behavioral finance on the asset management sector, emphasizing how investor behavior impacts the architecture of the company. This viewpoint emphasizes the importance of behavioral finance beyond human decision-making, extending its effect on financial institution structure. Third, there is a rising awareness of the need of incorporating behavioral aspects into standard financial models. To measure loan default risk, Goel and Rastogi (2023) present a conceptual model that integrates borrowers' behavioral and psychological features. This integration recognizes that behavioral characteristics, in addition to traditional financial indicators, play an important role in credit risk assessment. In contrast to the previous works, Goel and Rastogi (2023) investigate borrowers' behavioral features as predictors of loan default. This demonstrates the widening scope of behavioral finance to include both investors and borrowers in understanding financial outcomes. Overall, the articles discuss many elements of behavior, from investor decision-making to credit risk assessment, and while they all agree on the importance of behavioral finance in explaining financial behavior, they provide differing viewpoints. These results add to an in-depth comprehension of behavioral finance and its effects on financial markets, institutions, and decision-makers.
The results of the five publications point to a number of intriguing topics for behavioral finance study in the future. First off, further research into how external factors—like pandemics or economic crises—affect investor behavior will help us better understand how emotions and heuristics affect financial decision-making in uncertain times (Wadhawan & Kulkarni, 2022). As noted in the study on the capital market of Bangladesh (Yasmin & Ferdaous, 2023), further research is required to examine the impact of cultural and socioeconomic variables in producing behavioral biases and their implications on financial results. The development and evaluation of interventions and techniques to lessen the influence of behavioral biases on financial decision-making, both at the individual and institutional levels, might also be the subject of future study. Last but not least, additional study is necessary to comprehend the behavioral characteristics unique to this asset class, particularly the impact of sentiment and social media on cryptocurrency pricing and investor behavior (Ballis & Verousis, 2022). Scholars may develop behavioral finance theory and its useful applications in the financial industry by filling in these research gaps.
Ballis, A., & Verousis, T. (2022). Behavioral finance and cryptocurrencies. Review of Behavioral Finance, 14(4), 545-562. https://doi.org/10.1108/RBF-11-2021-0256 Links to an external site.
Goel, A., & Rastogi, S. (2023). Understanding the impact of borrowers' behavioral and psychological traits on credit default: Review and conceptual model. Review of Behavioral Finance, 15(2), 205-223. https://doi.org/10.1108/RBF-03-2021-0051 Links to an external site.
Verlaine, M. (2022). Behavioral finance and the architecture of the asset management industry. Journal of Economic Surveys, 36(5), 1454-1476. https://doi.org/10.1111/joes.12500 Links to an external site.
Wadhawan, A., & Kulkarni, M. S. (2022). Behavioral finance and COVID-19. Cardiometry, (23), 236-243. https://doi.org/10.18137/cardiometry.2022.23.236243 Links to an external site.
Yasmin, F., & Ferdaous, J. (2023). Behavioral biases affecting investment decisions of capital market investors in Bangladesh: A behavioral finance approach. International Journal of Managerial Finance, 20(2), 232-250.
We are a professional custom writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework.
Yes. We have posted over our previous orders to display our experience. Since we have done this question before, we can also do it for you. To make sure we do it perfectly, please fill our Order Form. Filling the order form correctly will assist our team in referencing, specifications and future communication.
2. Fill in your paper’s requirements in the "PAPER INFORMATION" section and click “PRICE CALCULATION” at the bottom to calculate your order price.
3. Fill in your paper’s academic level, deadline and the required number of pages from the drop-down menus.
4. Click “FINAL STEP” to enter your registration details and get an account with us for record keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
5. From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.
Need help with this assignment?
Discount Code: SAVE25