Heuristic. Psychological Aspects of Decision-Making on Capital Market - Literature Review
Heuristic. Psychological Aspects of Decision-Making on Capital Market - Literature Review

Summary/Abstract: Purpose – the aim of this paper is to review the impact of heuristics bias decision-making on capital market. Heuristics are efficient cognitive processes that ignore part of information. In classical view, heuristic decisions save effort, but imply greater errors then “rational” decisions, defined by logic and statistical model. It clearly emerges that in real life people do not always make rational decisions based on established preferences and complete information. In many ways their behavior thus contradicts the homo oeconomicus model. These psychologically driven inadequacies also occur with investment decisions. Design/methodology/approach – literature review. Findings – much of the behaviour observed is caused through people trying to cope with the complexity of the world around them by approximating, because collating and evaluating all the factors of relevance to a decision overtaxes their mental processing capacity. Originality/value – article can be base to formulating new concept of rationality or new concept of homo oeconomicus (Mikołajek-Gocejna, 2017).

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