Based on the influential seminal work of Kahneman and Tversky behavioral theories have been separated from the traditional rational approach to understand and influence human behavior in terms of decision making process, which can be applied to finan... Read more

Based on the influential seminal work of Kahneman and Tversky behavioral theories have been separated from the traditional rational approach to understand and influence human behavior in terms of decision making process, which can be applied to finance as well as other social sciences. The traditional rational approach seeks to understand the financial markets using models in which the agents or variables are 'rational'. Rationality is based on the assumption, that the agents willreceive information, update their preferences and always choose alternatives which maximize their expected utility. Less