Behavioral finance is an important component in making investment decisions. This weeks work hopefully hi-lighted its importance. Prospect theory and its originators, Daniel Kahneman and Amos Tversky, have made a significant contribution to the investment decision process. For your second assignment, a 500-700 word paper on Prospect Theory is requested. This paper will be 5% of your final grade. The paper should be address the following:
- A brief description of Kahneman and Tversky (10% of grade)
- Attaining the 500 minimum word requirement (20% of grade)
- The importance of this break through work. (30% of grade)
- How it applies to stock market decisions. (40% of grade)
Listed below are a few sites to help you get going(you will need to copy and paste these links into your browser):
http://www.dummies.com/personal-finance/investing/technical-analysis/what-is-prospect-theory/
https://www.economist.com/blogs/freeexchange/2013/08/prospect-theory-and-economics
https://www.youtube.com/watch?v=0bHNV5odJQE
Sample Solution