`behavioral-finance` Related Article Results

Mental accounting is a cognitive system in which individuals evaluate financial decision-making processes by categorizing economic events within their own minds. While traditional accounting systematically records the financial transactions of organizations, mental accounting extends this process to the individual level, functioning as a mechanism for decision-making and evaluation conducted internally. People track their income and expenses not only numerically but also by separating them into

Financial decision-making processes have been examined for many years within the framework of the rational individual assumption. Classical and neoclassical financial theories assume that investors possess complete information, process this information flawlessly, and form their expectations based on mathematical probability calculations. This approach rests on the notion that individuals make rational decisions aimed at maximizing utility. However, research conducted from the second half of the

In financial literature, the modeling of individual decision-making processes has long been approached within the framework of rationality assumptions. The neoclassical approach assumes that investors fully and accurately evaluate all available information, aim to maximize utility, and make decisions accordingly. Within this framework, expected utility theory and the efficient markets hypothesis became foundational pillars of financial science. Expected utility theory long dominated as a normati