Behavioural Finance: Application to Investors and Managers in Spanish Mutual Funds

Many authors consider that behavioural finance is still in its infancy, but the academic interest on these new tendencies of research is growing rapidly. Empirical research has shown that markets are not always efficient and participants do not always act as they are supposed to. Cognitive biases are present in everyone's decisions from managers to investors, we should not forgot that our human psychology is inherent to our daily decisions and, especially, to the financial ones. This book, therefore, provides a meeting point from classical to behavioural theories in financial decisions. An application is made in the Spanish mutual fund industry to show how investors, individual and institutional, do not behave according to rational expectations. The study should help shed some light on these behavioural biases any of us could be subject to. Being aware of them, we will probably be able to handle with them in a better position.