Prospect theory explains asymmetric risk preferences across gains and adverse outcomes, Behavioral anomalies challenge the assumption of fully efficient capital market pricing, Investors often follow trends instead of checking a stock's true value, Fear can make traders sell shares too quickly during market drops, Greed may push investors to buy overpriced stocks in a rally, Some investors hold losing stocks because they hope prices recover, Past prices can influence how people judge a stock today, News headlines can affect trading decisions more than company data, Investors may ignore risks when recent profits make them overconfident, People often avoid losses more strongly than they seek gains, Market rumors can change demand even without strong financial evidence, Investors sometimes copy others instead of doing their own analysis

Behavioral Finance

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