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There are numerous cardinal and ordinal approaches to consumer behavior. Most of it concerns with consumer equilibrium on the assumption that consumers are rational. However in the real world, consumers diverge from rationality on various occasions. Psychological and emotional quotients are instrumental in changing consumer decisions. Behavioral finance deals with each of the cognitive behavior those influences economic decisions. Get more of behavioral financing from behavioral finance assignment help.
Understanding behavioral finance from Behavioral Finance Homework Help
This subject deals with the anomalies and changes in behavior patterns owing to external or internal factors. For example, an emergency situation like a calamity, or an accident might have adverse effects on how individuals behave in the market. You can learn about economic reactions to emergencies from Courseworktutors professionals.
The macroeconomic theorizes of rational expectations that play a role in determining long run equilibrium incorporates the function of expectorations. Note that in the short run, prices and wages are sticky that it they do not react to the immediate changes in fiscal or monetary behavior.
Impact of behavior on personal behavior and its effect
Suppose that you are a foreign currency trader and you deal with the change in relative prices of currencies. In the process, you end up reacting to change in economic variables like unemployment and inflation. You can get such instances cleared with our Behavioral Finance Assignment help. There are more like:
- Consumers may react to changes in prices of other commodities, income, and change in tastes and preferences. Some of the most common effects of irrational behavior are Bandwagon effect and Giffen goods.
- When individuals see the usage of a costly phone or a luxury sedan vehicle, they may decrease their consumption of normal In turn, they may devote it to buying more of luxury items meant for flaunting and display.
- Similarly, the growing trends in owning smartphones have had its influence on the growing smartphone market.
Additionally, it shows that marketing and advertisement have their impact on affecting minds of consumers. Behavioral finance homework help deals with all such cases and more.
Effect of past behavior and demand trends on consumer behavior:
- Past behavior:
Precious metals like gold and silver rise or fall in their intrinsic value depending on past trends. For example, an inflationary pressure on the economy may result in a temporary rise in gold price, which may adjust in the long run. This may instigate households to buy more of gold and maybe sell it later once its price adjusts.
- Growing and current trends:
A part of personal financing depends on the growing economic trends. For example, festive months may see a change in demand for more luxurious goods, the type of which depends on the recent trends. Say if palazzos are the fashion, then there might be a rise in its value since customers agree to pay more to keep up with the trend.
Role of expectations and market inefficiencies in behavioral financing
- Economists are of the opinion that markets are meant to perform in a certain designated approach. But often behavioral or cognitive differences in choice may affect market functioning resulting in market failure.
- In case of information asymmetry, buyers may end up buying relatively worse commodity (especially in the second-hand market) owing to it lower Since it is relatively lower than expected price payable, customizers end up buying more of it leading to moral hazard.
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Gather more knowledge on cognitive behavior and its impact from our experts
Emotional and mental causes may be instrumental in influencing the demand patterns for particular commodity during a specified period of time. Our premier Behavioral finance assignment help may provide additional information on this subject. Get in touch and excel.