Description
This book delves into a comprehensive exploration of herding and market overreaction combining psychological insights to understand why investors follow the crowd and the investment tips of others. It delves into foundational theories of behavioral finance, examining cognitive biases and emotional factors that drive collective behavior in financial markets. Through detailed case studies, including the 1998 Long-Term Capital Management Collapse, the 2015 Chinese Stock Market Crash, and the 2021 Meme Stock Phenomenon, the book offers real-world examples of herding impacts. It discusses the role of social media and technology, such as AI and machine learning, in shaping investor behavior and provides a global perspective on market reactions across different cultures. Additionally, the book explores regulatory implications and future trends in behavioral finance, making it an essential resource for academics, finance professionals, and advanced students seeking to understand the psychological underpinnings of financial markets.
Table of Contents
1. The Psychology of Herding.- 2. Market Overreaction Explained.- 3. The Cost of Following the Crowd.- 4. Psychological Drivers of Herding.- 5. Types of Herding Behaviour.- 6. Digital Herding and Technology’s Role.- 7. Rational Vs. Irrational Herding.- Herding’s Hidden Risks and Rewards.- 9. Cognitive Biases and Market Reactions.- 10. Emotions and Overreaction.- 11. Identifying Overreaction in Markets.- 12. Strategies to Avoid Overreaction.- 13. Cultural Influences on Overreaction.- 14. The Psychology of Greenwashing And ESG Disclosures.- 15. The Psychology of Greenwashing and Investor Perception.- 16. The Role of Sustainable Finance in Market Stability.- 17. The Future of Behavioural Finance in a Sustainable World.
