Essay: Irrational Decision Making by Human Beings

Sample Essay

The article critically evaluates these four themes and points out several flaws in these themes such as lack of proof and detailed explanation in the first model, irrational decision making by human beings even after training as suggested in the second model and importance and relevance of emotions in decision making as opposed to the third model. Olsen also explains that several researches have shown that people make decisions based on what a particular group or society as a whole perceives. This phenomenon is seen in financial markets where people usually tend to follow the crowd whether the crowd makes rational or irrational decisions. The writer presents this notion in criticism of the last traditional financial model which explains that decisions are based on personal gains.

The article compares traditionalist and behavioral views regarding other models and themes. Traditionalists regard financial risk as the variances in returns and investment whereas behavioral finance suggests that financial risk is a human perception based on several characteristics and decisions are made based on two processes. Another theme discussed in the article is the phenomenon of herding and crowd following. Traditionalists suggest that following a certain group and making decisions based on decisions made by a reference group is rational. Behavioral finance practitioners on the other hand suggest that herding and crowd following is based on a much larger theme rather than decision making.

Place your custom writing order at an affordable price, written by professional writers

 


Related pages

A+ papers are what we do the best, and that’s our promise!

We believe our success is due to countless of satisfied customers who continue to trust us and cherish this professional relationship. Our custom essays are guaranteed to be original and delivered before the deadline.

  • Countless students worldwide are satisfied with our professional writing services.
  • Professionally written custom paper according to your specific instructions.
  • We offer the most experienced bank of dependable and capable academic writers.
  • All assignments are thoroughly researched and 100% guaranteed as original.
  • 100% privacy guaranteed – your private information is strictly confidential.
  • Dedicated 24/7 friendly support team, always available to assist you.

—————————————————————-