Review of literature on customer preference

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Review of literature on customer preference

Investor behaviour often deviates from logic and reason, and investors display many behaviour biases that influence their investment decision-making processes. Kent Baker and Victor Ricciardi describe some common behavioural biases and suggest how to mitigate them. Investor behaviour often deviates from logic and reason.

Emotional processes, mental mistakes, and individual personality traits complicate investment decisions. Thus, investing is more than just analysing numbers and making decisions to buy and sell various assets and securities.

A large part of investing involves individual behaviour. Ignoring or failing to grasp this concept can have a detrimental influence on portfolio performance.

Review of literature on customer preference

Behavioural biases in investing encompass many types. For example, cognitive biases refer to tendencies to think and act in certain ways.

A cognitive bias can be viewed as a rule of thumb or heuristic, which can lead to systematic deviations from a standard of rationality or good judgment.

Some controversy still exists about whether some of these biases are truly irrational or whether they result in useful attitudes or behaviour. Other biases are more emotional in nature. An emotional bias is one that results in taking action based on feelings instead of facts.

Given that some overlap exists between cognitive and emotional biases, we simply call them behavioural biases. An important aspect of avoiding such biases is to become aware of them. Thus, by avoiding behavioural biases investors can more readily reach impartial decisions based on available data and logical processes.

Our purpose is to briefly discuss investor behaviour, review eight common behavioural biases, and then concentrate on two types of investors — overconfident investors and status quo investors.

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Baker and Nofsingerand Baker and Ricciardi provide more detailed discussions of investor behaviour including behavioural biases.

Investor Behaviour What is investor behaviour? The field of investor behaviour attempts to understand and explain decisions by combining the topics of psychology and investing on a micro level i.

The decision-making process of investors incorporates both a quantitative objective and qualitative subjective aspect that is based on the features of the investment product or financial service. Investor behaviour examines the mental processes and emotional issues that individuals, financial experts, and traders reveal during the financial planning and investment management process.

In practice, individuals make judgments and decisions that are based on past events, personal beliefs, and preferences. They establish short cuts or heuristics that can save time but lead them away from rational, long-term thinking.

Understanding investor behaviour can inform investors about these biases and help them improve their decision-making processes in selecting investment services, products, and strategies.

As a result of the financial crisis ofthe discipline of psychology began to focus even more on the financial decision-making processes of individuals. This renewed interest by the social sciences and business disciplines has spurred new research on investor behaviour.

Common Behavioural Biases — Investors exhibit many biases. Few of these behavioural biases exist in isolation because deep interactions exist among different biases.

Nonetheless, the following list represents some common biases facing investors but others may be equally important depending on the specific situation. Baker and NofsingerRicciardiiSharesParkerand Seawright provide further discussion of behavioural biases and how to deal with them.

Representativeness results in investors labeling an investment as good or bad based on its recent performance.

Sample Issue

Consequently, they buy stocks after prices have risen expecting those increases to continue and ignore stocks when their prices are below their intrinsic values.The full text of this article hosted at initiativeblog.com is unavailable due to technical difficulties. Consumer Preference for Foreign Products: Investigating the factors influencing Consumers to prefer foreign Products over local ones (A Case From Pakistan) [Amir Ishaque] on initiativeblog.com *FREE* shipping on qualifying offers.

Understanding for consumer decision pattern and preferences is the priority of the companies so as to retain and win new customers in the current market. 1. Introduction. According to WWF (), the world is using the equivalent of planets to support human initiativeblog.com finding highlights that there is a huge gap between natural resource supply and human demand.

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Consumer Preference for Foreign Products: Investigating the factors influencing Consumers to prefer foreign Products over local ones (A Case From Pakistan) [Amir Ishaque] on initiativeblog.com *FREE* shipping on qualifying offers.

Understanding for consumer decision pattern and preferences is the priority of the companies so as to retain and win new customers in the current market.

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