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The Role of Group Psychology in Behavioural Finance: A Research Starting Point for Banking, Economic, and Financial Historians

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Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century

Part of the book series: Palgrave Studies in the History of Finance ((PSHF))

Abstract

This paper discusses the significance of group psychology within the field of behavioural finance in order to provide a starting point for researchers in banking, economic, and financial history. Some of the major themes of behavioural finance are presented, including overconfidence, representativeness, anchoring, worry, and herd behaviour. The other major portion of this piece examines group behaviour within the investment decision-making process, drawing on the social sciences (largely social psychology) to consider the topics of group polarisation and groupthink. The author provides an overview of each topic to encourage researchers to investigate these important issues as potential causes of historical events within banking, economics, and finance. Of course there are limitations to applying behavioural finance theories and themes to historical research. Historians should investigate these potentially new ideas with a degree of caution.

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Authors and Affiliations

  1. Business Management Department, Goucher College, Baltimore, MD, USA

    Victor Ricciardi

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  1. Victor Ricciardi
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Correspondence to Victor Ricciardi .

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Editors and Affiliations

  1. University of Duisburg-Essen, Duisburg, Germany

    Korinna Schönhärl

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Ricciardi, V. (2017). The Role of Group Psychology in Behavioural Finance: A Research Starting Point for Banking, Economic, and Financial Historians. In: Schönhärl, K. (eds) Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century. Palgrave Studies in the History of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-42076-9_12

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  • DOI: https://doi.org/10.1007/978-3-319-42076-9_12

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-42075-2

  • Online ISBN: 978-3-319-42076-9

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