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Financial BehaviorPlayers, Services, Products, and Markets$
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H. Kent Baker, Greg Filbeck, and Victor Ricciardi

Print publication date: 2017

Print ISBN-13: 9780190269999

Published to Oxford Scholarship Online: May 2017

DOI: 10.1093/acprof:oso/9780190269999.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2020. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 05 June 2020

Individual Investors

Individual Investors

(p.45) 3 Individual Investors
Financial Behavior

Henrik Cronqvist

Danling Jiang

Oxford University Press

Traditional finance explains individual investor’s behavior and financial decision making based on economic incentives and rationality. Modern finance, however, takes a holistic view and searches for not only economic but also biological, psychological, and social factors that shape decision making. In this new approach, genetics, life experiences, psychological traits, social norms, and peer influences, as well as beliefs, values, and culture help determine an investor’s stock market participation, equity holdings, frequency of trading, extent of diversification, and investment preferences. The collective preferences and actions of individual investors also have an impact on asset pricing and corporate decisions.

Keywords:   individual investors, investor behavior, modern finance, holistic view

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