The influence of behavioral factors on the stock market

Abstract

There is an old saying on Wall Street that the market is driven by just two emo-tions: fear and greed. They can be a real disaster as they can affect stock markets and human intentions as well. In the realm of investing, one often hears about, for instance, the contrast of value investing and growth investing. These are important concepts, but human psychology is equally important. There is a vast academic literature, known as "behavioral finance," devoted to the topic. Our goal below is to describe what happens when emotions drive investment decisions