We observe their behavior and we mimic that behavior. In short, we do what they do. This theory is also known as social cognitive theory. Social learning theory, developed by psychologist Albert ...

Behavioral economic theories are used to explain most everyday decisions, such as what people buy, how they manage their finances, and whether or not they make healthy lifestyle choices.

(See “Daniel Kahneman: The Thought Leader Interview,” by Michael Schrage, s+b, Winter 2003.) The application of behavioral finance theory to corporate finance is now attracting the attention of a ...

Modern portfolio theory is a prescriptive theoretical model that shows what asset class mix would produce the greatest expected return for a given risk level. Behavioral finance instead focuses on ...