African Culture Essays - African Writers Series,

African Culture "Things Fall Apart" - short summary of the book, analysis of African Culture before by appearance of white man. Things fall apart, is the story of an Ibo village- Umuofia , which takes place in the late 1800s. Things Fall Apart analyzes the destruction of African culture by the appearance of the white man (Christian Missionaries) in terms of the destruction of the bonds between individuals and their society. Christian Missionaries try to convert the people of the Ibo society to Christianity, and in their efforts of doing so, they bring about a downfall in the social and cultural structure of the people in this society. Like the title suggests ?Things fall apart' in the society largely due to the interference of the Christian Missionaries. The main character in this story are Okonkwo ? a"strong" man whose life are dominated by fear and anger. Okonkwo was known throughout the village for his strength and valor. He was the greatest wrestler alive! Okonkwo had achieved quite in his life, he was a wealthy farmer, a husband with three wives, a title-holder among his people. However, Okonkwo's childhood was not a happy one. Okonkwo's father Unoka, was quite an unsuccessful man. He did not hold any titles, which was considered a shame in his clan. Unoka was lazy and improvident when he was young, he owned almost all of his neighbors some amount of money. Probably the only thing that Unoka was good at was at his flute, with which he wasted most of his time. Unoka was a man who didn't care much about tomorrow. When Unoka died he was heavily in debt and had taken no title at all. Okonkwo had to fend for himself right from childhood. Fortunately a man in his clan was judged on his own worth and not that of his father. Age was respected among his people but achievement revered. And Okonkwo was a man of great achievements. However, such a childhood left quite some scars on Okonkwo's life. Okonkwo was scared of failure, to be called weak. So to put up a show of his strength and manliness, he was a very stern and aggressive when it came to treating women, because that is what was considered to be manlike in the Ibo Society. B. Give specific example of values of the culture described in the book and explain how they are important to the development of the story. Respect: ?Age was respected among his people but achievement was revered' ? People of the Ibo culture had respect for age. An old person was looked up upon, given due respect. At the same time, a person with abilities and achievements was also honored, like in the case of Okonkwo, whose fame rested on his solid personal achievements. He was a wealthy farmer , a champion in wrestling and a *successful man. Similarly even the art of conversation was rewarded very highly, a person with good conversational skills was respected for his ability! Success: The measure of a man's success was mainly based upon the number of wives he had, the size of his barn and the number of titles he had taken. In all there were 4 titles, the highest and most difficult to achieve being the fourth. A man with many titles was looked upon with great respect in the village. Belief in the Supernatural: The people in this culture had firm belief in supernatural powers. They believed that after death their ancestors became spirits called egwugwu. They believed in the power of the Oracle (a holy spirit who preached and advised the people), and its decisions. One who disobeyed the Oracle was punished. Okonkwo had to goon an exile for seven years because of such laws against Male Domination: The Ibo society showed prominent male dominance. In the Ibo society anything strong was likened to man and anything weak to woman. The husband was the chief of the family. Bigamy was allowed. The tribe also allowed wife beating . The novel describes two instances when Okonkwo beats his second wife, once when she did not come home to make his meal. He beat her severely and was punished but only because he beat her during the Week of Peace. He beat her again when she referred to him as one of those "guns that never shot." Role of Women: In his novel Mr.Achebe shows that the Ibo nonetheless assigned important roles to women. For instance, women painted the houses of the egwugwu. Furthermore, the first wife of

Thailand essays

Thailand essays Pratet Thai, (Kingdom of Thailand), is one of if not the most beautiful countries in Asia. It has a vast and colorful history. Thailand has some of the greatest architectural masterpieces in the world. Some of the greatest styles of martial arts also come from Thailand. There are many different aspects of this magnificent country. Thailand is located in southern Asia and it borders Cambodia, Laos, Malaysia, and Myanmar (Burma). There are four major types of land. In the north are towering mountains. In the Northeast is a rolling landscape of plateaus and is sometimes plagued by drought. In the center of Thailand are very fertile plains, the perfect atmosphere for growing rice. And finally in the south is the dense tropical rain forest. Thailand has a very tropical climate with three informal seasons: cool, hot, and rainy. Almost all of Thailand with exception of the mountain region is very humid. Temperatures range from 8 degrees Celsius at night to a scorching 38 degrees Celsius or higher in the day during the hottest months. The countries rich soil and abundant water supply provide ideal conditions for growing rice. Thailand produces plenty of rice for it's people and has enough left over to be the worlds largest exporter of it. In addition to the rice fields, Thailand has an abundance of Mulberry trees, necessary for producing silk. Also in the south grow Rubber trees vital for the economy. Other crops produce a variety of tropical fruits including pineapples, oranges, grapes, melons, mangoes, papayas, and bananas. In addition to the preceding fruit widely known in the United States, they also grow fruits that are very rarely found here in the states except for in a few Asian markets. These fruits are lansata, rambutans, tamarinds, longans, mangosteens, jackfruits, durian, and sapodillas. Thailand habitats include animals and plants that can be found nowhere else in the world. This country, about the size of France, ha...

Immigrant kids Essay Example | Topics and Well Written Essays - 1250 words

Immigrant kids - Essay Example This paper seeks to show that consideration for needs of immigrant children is a reason for the government to provide them with public attorneys to represent them so that these children can gain proper legal advice to ensure they get a fair chance of restarting their lives. Most unaccompanied child immigrants come for Central American countries such as Honduras and Guatemala which have over the past few years come to be riddled with violence and insecurity to such an extent that they have essentially become failed states. Children in these countries have ended up becoming the victims of situations over which they have no control and a large number of them have been forced from school and into conducting illegal activities on behalf of the various gangs that have become prominent in Central America. A result has been that many of these children have had their lives taken away and have been forced to grow up too quickly because that is the only way through which they could achieve their survival. One would argue that their choice to come to the United States has, therefore, not been one made out of a need only for the need to achieve economic prosperity, but also to ensure that they are able to rebuild their lives in a manner that allows them to live awa y from the violence and poverty in their home countries (Scott 1). These children have to be treated in a responsible way that ensures that not only are all their immediate needs catered for, especially when one considers that age, but also that they are able to gain legal representation to ensure that they are allowed to build a life in the United States without the fear of being deported back to their home countries. Immigrant children need legal representation in order to make the courts understand that they have not come to the United States willingly but are victims of circumstances. One would argue that unaccompanied child

Aspirin Assignment Example | Topics and Well Written Essays - 500 words

Aspirin - Assignment Example Two Italians, Brugnatelli and Fontana, had in fact already obtained salicin in 1826, but in a highly impure form. By 1829, [French chemist] Henri Leroux had improved the extraction procedure to obtain about 30g from 1.5kg of bark. In 1838, Raffaele Piria [an Italian chemist] then working at the Sorbonne in Paris, split salicin into a sugar and an aromatic component (salicylaldehyde) and converted the latter, by hydrolysis and oxidation, to an acid of crystallized colorless needles, which he named salicylic acid (Bellis, 2012) Acetyl salicylic acid is the chemical name of Aspirin. In other words, Salicylic acid is the major content of Aspirin. Aspirin plays a vital role in the metabolism of humans and animals. This paper analyses the various aspects of aspirin such as chemical formula, systemic names, physical and chemical properties, relevance of its physical and chemical properties and precautions while taking aspirin etc. As mentioned earlier, Acetyl salicylic acid is the chemical name of Aspirin. C9H8O4 is the chemical formula of aspirin. The elaborated chemical formula of aspirin can be represented as CH3COOC6H4COOH. In other words, each aspirin molecule consists of 9 carbon atoms, 8 hydrogen atoms and 4 oxygen atoms. Structural formula of aspirin can be represented as follows. Physically, Aspirin is a solid substance. It is colorless, odorless, white, crystalline, acidic substance. Its melting point is 137 °C and boiling point is 140 °C. Moreover, it is soluble in water. As evident from the chemical structure, Aspirin is an aromatic compound with a ring structure. It can be converted into several different useful compounds because of its ring or aromatic structure. â€Å"Molecular Weight of aspirin is 180.15 g/mole and its Specific Gravity: 1.35 (Water = 1)† (Material Safety Data Sheet Acetylsalicylic acid MSDS, n.d., p.3).

Severity of Sanctions Essay Example | Topics and Well Written Essays - 1500 words

Severity of Sanctions - Essay Example The implications of these two philosophies are quite different. Retribution focuses on the criminal's behaviour and stresses the need to punish him in proportion to the extent of damages caused or loss suffered. Conversely, the utilitarian stance focuses, not on the criminal, but on society as a whole with an aim at reducing crime and thereby ensuring the safety of society. Whilst both of these models are described in their pure theoretical form, in reality most cultures adopt a blended version of both. However, before we begin to fully examine the effectiveness of deterrence, an understanding of it is necessary. There are two types of deterrence: general and specific. Specific deterrence is aimed at eliminating the future criminal activity of the person being incarcerated or punished in order to avoid future punishment for repeating a similar crime whilst general deterrence's goal is reducing crime unilaterally by stopping others from committing like crimes for fear of receiving like punishment (Palmer 2005, p. 25). While it is impossible to argue that capital punishment is not a totally effective means of ensuring specific deterrence, its effectiveness as a deterrent to others is not so definitive. This leads us to the debate of the severity of sentencing and its effects on deterring criminal behaviour. Feinberg views punishment i... Instead of acting as a deterrent to preventing future criminal activity sentencing is merely a punishment and has nothing to do with deterring crime; rather its effectiveness as a specific deterrent only lasts as long as the prison sentence itself. In his explanation of the phenomenon of punishment Feinberg states: Punishment is a conventional device for the expression of attitudes of resentment and indignation, and of judgments of disapproval and reprobation, on the part either of the punishing authority himself or of those 'in whose name' the punishment is inflicted. Punishment, in short, has a symbolic significance largely missing from other kinds of penalties (1994, p. 74). He elaborates in greater detail by stating that greater than disapproval, punishment is, in effect, society's method of 'getting back' at criminals and further showing its "vindictive resentment" (1994, p. 76). From his position it is clear that criminal sentencing is not deterrent in intent; rather it is retributive in nature. Von Hirsh and Ashworth take a similar stance but further elaborate on what they view to be the causal effects of this 'vindictive resentment'. In their theory politicians use the public's fear of crime and criminals to create a heightened state of panic amongst the public. With this increased sense of fear and outrage the brunt of the retributive wrath falls upon those least able to defend themselves. Clearly seeking neither retribution nor deterrence, the political overtones and the media frenzy caused results in a public outcry for justice. As public sentiment grows more fearful and resentful, the severity of punishment rises proportionally. The sentence no longer deals with the specific nature or severity crime itself, but rather focuses

Behavioural Finance Theory Dissertation

Behavioural Finance Theory Dissertation A survey of behavioral finance 1. Introduction: The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the Capital Asset Pricing Model, the Arbitrage Pricing Theory, the Cox Ingersoll-Ross theory of the term structure of interest rates, and the Black-Scholes/Merton option pricing model, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it overreacts one day and behaves very normally the other day. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that The traditional theory has overestimated the rationality of investors , their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about the markets and factors that influence the markets. â€Å"The paradigm is shifting. People are continuing to walk across th e border from the traditional to the behavioral camp†. (Gervais, 2001, P.2). On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. Giving very less account to the behaviorist explanations of trends and the irregularities †anomaly† (any occurrence or object that is strange, unusual, or unique) Also argued that in order to locate the patterns the data mining techniques are much helpful.. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally overreaction and under reaction are the major causes of the market behavior. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both in the psychology or finance fields and therefore as a result the models presented is being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior impacting asset prices and explaining that the field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. Hirshleifer points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If the money managers are incorrectly rational, that means that they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary the underlying assumption that the investors and the managers are completely rational makes insightful sense to many people. 2. Traditional Finance Empirical Evidence: Traditional theory assumes that agents are rational the law of one price holds that is a perfect scenario. Where the law of One price states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as Arbitrageurs. And the agents rationality explains the behavior of investor Professional Individual which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns wh ere as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category `instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. (Crowell, 1994, p. 1) Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsig ht (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy, Self-serving bias and lastly Money illusion. Framing is basically the problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing Mental accounting Anchoring are the common forms of Framing 3. Market in efficiencies: As we found out that observed market outcomes are totally opposite to the rational expectations and the efficient market hypothesis. Mis pricing, irrational decision making and return anomalies are the examples of it. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. Al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior. 4. Investing and cognitive bias: Money Managers and Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money manag ers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks. Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less th an optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rank companies in the similar industry ba sed on eight factors. Quality of Management, Quality of products services, Innovativeness, Long term Investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise Use of Corporate assets. (Crowell, 1994). The assumptions that we made were that that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. (Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk; Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of t he stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret. (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 Tony Blair stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment. In 2005 president bush also portfolio announced one such plan for personal account life cycle fund which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily that same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theor etical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. 5. Agents Rationality: Global culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people basically appears as a logical outcome of a belief system of a nation group of people. The Cultural factors were one of the major influences on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebelliou Behavioural Finance Theory Dissertation Behavioural Finance Theory Dissertation A survey of behavioral finance 1. Introduction: The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the Capital Asset Pricing Model, the Arbitrage Pricing Theory, the Cox Ingersoll-Ross theory of the term structure of interest rates, and the Black-Scholes/Merton option pricing model, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it overreacts one day and behaves very normally the other day. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that The traditional theory has overestimated the rationality of investors , their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about the markets and factors that influence the markets. â€Å"The paradigm is shifting. People are continuing to walk across th e border from the traditional to the behavioral camp†. (Gervais, 2001, P.2). On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. Giving very less account to the behaviorist explanations of trends and the irregularities †anomaly† (any occurrence or object that is strange, unusual, or unique) Also argued that in order to locate the patterns the data mining techniques are much helpful.. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally overreaction and under reaction are the major causes of the market behavior. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both in the psychology or finance fields and therefore as a result the models presented is being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior impacting asset prices and explaining that the field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. Hirshleifer points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If the money managers are incorrectly rational, that means that they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary the underlying assumption that the investors and the managers are completely rational makes insightful sense to many people. 2. Traditional Finance Empirical Evidence: Traditional theory assumes that agents are rational the law of one price holds that is a perfect scenario. Where the law of One price states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as Arbitrageurs. And the agents rationality explains the behavior of investor Professional Individual which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns wh ere as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category `instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. (Crowell, 1994, p. 1) Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsig ht (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy, Self-serving bias and lastly Money illusion. Framing is basically the problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing Mental accounting Anchoring are the common forms of Framing 3. Market in efficiencies: As we found out that observed market outcomes are totally opposite to the rational expectations and the efficient market hypothesis. Mis pricing, irrational decision making and return anomalies are the examples of it. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. Al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior. 4. Investing and cognitive bias: Money Managers and Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money manag ers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks. Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less th an optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rank companies in the similar industry ba sed on eight factors. Quality of Management, Quality of products services, Innovativeness, Long term Investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise Use of Corporate assets. (Crowell, 1994). The assumptions that we made were that that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. (Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk; Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of t he stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret. (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 Tony Blair stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment. In 2005 president bush also portfolio announced one such plan for personal account life cycle fund which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily that same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theor etical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. 5. Agents Rationality: Global culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people basically appears as a logical outcome of a belief system of a nation group of people. The Cultural factors were one of the major influences on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebelliou

Ray Harryhausen :: essays research papers

Ray Harryhausen is the greatest artist in stop-motion animation. With a career that spans 40 years of cinema, he became a by-word for innovation, excitement and entertainment in the world of special effects and film fantasy.   Ã‚  Ã‚  Ã‚  Ã‚  Born 1920 in Los Angelas, Harryhausen from an early age was facinated with stop-motion animation due to seeing King Komg at the agee of thirteen. Ray Harryhausen was given an opertunity to persue a dream and learn from the greatest of animators, Willis O’Brien. American Film magazine, (June 1981 p 49) â€Å"I had a magnicficent two year period while working on Mighty Joe Young with Obie†, â€Å"covering the long perproduction and photography. He was so involved in production problems that I ended up animating about eighty-five percent og the picture†.   Ã‚  Ã‚  Ã‚  Ã‚  After ganing vital experience with Willis o’Brien and having completed studies at the University of Southern California in painting, drama, sculpting, anatomy and photography. Ray Harryhausen produced a series of short films called Mother Goose Fairy Tales. Coming to the final phase of the series, Ray Harryhausen was approached by a young producer, Charles Schneer,and formed a productive patnership which lasted over thrity years. Ray Harryhausen and Charles Schneer went to work and produced a whole series during the science fiction boom of the 1950’s. Titles included It Came from Beneath the Sea, Earth versus the Flying Saucers and in 1957, Twenty Million Miles to Earth.   Ã‚  Ã‚  Ã‚  Ã‚  It was also in this period that Ray Harryhausen pioneered his new form of stop-motion animation – Dynamation – which then became a key feature consistant through out all of his work.   Ã‚  Ã‚  Ã‚  Ã‚  Breaking away from the 1950’s had Ray Harryhausen and Charles Schneer leaving science fiction behind and venture into the world of fantasy, fairy tale amd mythology.. in the decaide of 1950 to 1960, they both produced the highly acclaimed Seventh Voyage of Sinbad. This was also they’re first opportunity to use colour film.   Ã‚  Ã‚  Ã‚  Ã‚  In 1963, Ray Harryhausen produced his most famous and successful film Jason and the Argonants. Quoted by Adrian Wootton interviewing Ray Harryhausen, (1)â€Å"Jason and the Argonants is also regarded by Ray Harryhausen himself, as his most complete film, incorporating as it does much of his seamless and yet outstanding stop-motion animation in many memorable sequences†.   Ã‚  Ã‚  Ã‚  Ã‚   Ray Harryhausen finally brought the curtain down on his film career in 1982 with his and Charles Schneer greek mythological epic, Clash of the Titans. In 1991, at the sixty-fourth Academy awards, Ray Harryhausen received belatent recognition for his abilities and received the Gordon E.

Evaluate the Possible Consequences of Michelin Failing to Meet Its Aims and Objectives Essay

Objectives – markets and customers, employees, economic performances, environmental policy and product/manufacturing. These provide guidance for management actions. Most organisations have general or overall aims which they can break down into specific objectives and aims. If aims and objectives fail to be successful there is a change the business will no longer work out. Michelin will have many consequences if the business fails to meet aims and objectives. Meeting stakeholder’s needs: Michelin looks to combine high levels of all stakeholder groupings. The company recognises that its long-term development depends on maintaining a balance between the needs of customers, employees, shareholders and the environment. This involves not only considering the `individual benefit` of a particular stakeholder grouping, but also the `collective benefit` of all the groups. Michelins policy on products and services reflect this approach. Michelin recognises that its long term success and development depends on maintaining a balance between all of its stakeholders needs. If there is an Impact on the stakeholders – Employees will not have a safe, secure job and may have to take a pay cut or reduce hours they work, this may lead employees to look into finding a different job where they know the business is successful. They may not get the level of training they have been used to. Customers may no longer be able to buy the same quality of goods and services if they fail to meet their aims and objectives this will be a big downfall in the business, they could lose customers which will make the business very unsuccessful. Shareholders may not receive the same return on investment that they once did or are looking for. Shareholders want a healthy dividend. Suppliers may not benefit from regular orders and prompt management from Michelin. If Michelin are meeting their objectives they will struggle financially this will cause many problems. Public authorities such as the local business community may no longer give Michelin the support and co-operation it once did this is because the business is not working as it used to. Communities may be affected by Michelin not meeting its aims and bjectives as it may put local people out of jobs as it has 125,000 employees. Environment may be affected by Michelin not meeting its aims and objectives as their products may become not very environmentally friendly. This will lose the business respect and potentially customers as well. Michelins current policy on products and services reflects this collective approach and will help them to meet targets of the business, without aims and objectives the business will have hardly any chance of being successful in the near future.

Free Essays on Thems.

It is only human nature that we develop our self image based on society’s view of a perfect body. Bigger is better is the most commonly used clichà ©. Women are getting breast implants at an ever growing rate. Men are doing painful exercises and ordering expensive pills all in the race for bigger. I never agreed with the clichà ©. I don’t look for the 36-24-36 in my women. I believe that a natural breast type is more attractive than that of the exaggerated almost caricature like implanted look that is prevalent in Hollywood today. The problem is indeed Hollywood, which has a big affect on our self image as a whole. We see the way the rich and famous live and we seek to emulate it. This includes everything from their lifestyle to their look. Another clichà © I have become familiar with is â€Å"it’s not the size of the boat; it’s the motion of the ocean†. Women like for their man to master the art of sex and want a man that can help them reach a c limax. Whether their partner is built like a porn star or not is irrelevant. What matters is if their partner is confident in his self and can perform. Men however are almost completely opposite. I believe that men are more caught up in size than women. Men fantasize about the women of Hollywood and look for a woman with their similar body type. A small waist and a large bust have become ideal. This is part of the problem causing the outbreaks of implants in women.I believe that bigger is nice but contrary to popular belief, bigger is not necessarily better.... Free Essays on Thems. Free Essays on Thems. It is only human nature that we develop our self image based on society’s view of a perfect body. Bigger is better is the most commonly used clichà ©. Women are getting breast implants at an ever growing rate. Men are doing painful exercises and ordering expensive pills all in the race for bigger. I never agreed with the clichà ©. I don’t look for the 36-24-36 in my women. I believe that a natural breast type is more attractive than that of the exaggerated almost caricature like implanted look that is prevalent in Hollywood today. The problem is indeed Hollywood, which has a big affect on our self image as a whole. We see the way the rich and famous live and we seek to emulate it. This includes everything from their lifestyle to their look. Another clichà © I have become familiar with is â€Å"it’s not the size of the boat; it’s the motion of the ocean†. Women like for their man to master the art of sex and want a man that can help them reach a c limax. Whether their partner is built like a porn star or not is irrelevant. What matters is if their partner is confident in his self and can perform. Men however are almost completely opposite. I believe that men are more caught up in size than women. Men fantasize about the women of Hollywood and look for a woman with their similar body type. A small waist and a large bust have become ideal. This is part of the problem causing the outbreaks of implants in women.I believe that bigger is nice but contrary to popular belief, bigger is not necessarily better....

Good Comedy is tragedy narrowly averted Essays

Good Comedy is tragedy narrowly averted Essays Good Comedy is tragedy narrowly averted Essay Good Comedy is tragedy narrowly averted Essay the deception towards Beatrice is performed by Hero and Ursula. This is significant as Hero is first portrayed as quiet and innocent and then is shown to insult Beatrice behind her back. This could be seen in two different ways, the reader could interpret this to be as a means for Beatrice own good so that she will change who she s for Benedict, or this could be a subtle way of Hero telling Beatrice what she really thinks of her in a clever way that doesnt look as though she is insulting her. The method of deception for the women is a lot harsher than that of the men, they insult Beatrice and try to make he feel bad about herself by calling her self-endeared an agate very vilely cut and saying that she cannot love this appears to hurt Beatrice and she says that she will change who she is for Benedict. However, if the play was a tragedy then this could have easily been taken the wrong way and hurting Benedict and Beatrice relationship further y making Beatrice believe the things that are said and possibly becoming bitterer. By describing Beatrice as an agate very vilely cut it suggests that she is beautiful on the inside but her harsh persona makes her seem like a shrew. An agate is a type of semi- precious stone that is blue in color, the connotations of the color blue is that of sadness, portraying the idea that Beatrice appears sad with her life and that is why she has to change so that she can be happy with Benedict.

Economics Article Commentary Essay Example | Topics and Well Written Essays - 750 words

Economics Article Commentary - Essay Example The author compares East Asian markets like South Korea, Hong Kong, Taiwan and Singapore which have grown under the control of their respective governments. Even the US markets which promote free trade have some participation of the government. Market liberalisation has resulted in adverse effects on the poor in the developing countries. In such countries, agriculture is the main occupation of majority of population. Agriculture sector allows the import of cheap products in the local markets. Small scale farmers of the developing countries like Ghana, Kenya are not able to sell their produce in their own countries and have to pay more for the farm needs. Free trade gives far more powers to the traders outside the country who make sure that in addition to the cheaper imports of their own products, exports of the country are bought at cheaper prices which eventually hits the local agriculture sector. This results in the exploitation of the poor farmers. Small scale farmers are losing their lands to richer sections of the society. Liberalisation is forcing gender inequality and unemployment. Market liberalisation is also affecting the environment. Earlier crops were grown according to soil types and climate. There was a vast diversity of the crops grown all round the year and in different regions. While now the concentration is on the growth of the cash crops fit for the export. Crops that are suitable for export are grown on a large scale affecting the environment conditions resulting from soil degradation and extensive use of chemical fertilizers and pesticides. As government does not interfere, all the support offered by the government to the small scale farmers is also lost such as subsidies, agricultural research, price control and so on. Free trade also hampers the self-sufficiency of a nation on its own production. Traders establish monopoly in the local markets.For overcoming this problem, governments should have selective intervention in the markets. As mentioned earlier East Asian markets like South Korea, Hong Kong, Taiwan and Singapore have benefited from the participation of government in controlling and managing the markets. Government decides the policies and restrictions such as investment tariffs and various taxes to be imposed on the foreign trade in order to protect the domestic trade and attain maximum benefit from the international commerce. Governments tend to maintain price stability and balanced growth keeping in mind the interests of every section of the society. Some of the steps the governments can take are: open an d fund government banks, promote savings, subsidised credit for the industries, investment in technological developments, promotion of export and protection from imports that can affect domestic produce. Governments provide aid to small scale farmers and declining industries. The main focus lies in the capital accumulation and labour literacy. The administration should selectively intervene to control the inflation. Public and private sectors must be able to share the information. Extensive exports and huge foreign investments regulated by government can boost up the economy. These are the steps taken by the governments of East Asian countries that resulted in their miraculous growth. US markets also support free trade but government plays an important role as well. Agriculture sector needs aids from the government and US government provides financial

Advertising Essay Example | Topics and Well Written Essays - 1000 words - 4

Advertising - Essay Example Goods and services offered to the public can be introduced or promoted. This can help business enterprises to increase sales, maximize profits, inform society, and build the image of goods and services, among many other advantages. Promotion of goods and services through advertisement makes consumers to be aware of specific products or services in the market. Information is important to consumers especially regarding to brand name, price, manufactures, trade mark and any other key details. These enhances making of right choices by consumers when buying a commodity or service. Today’s world is competitive and selling commodities or services is a challenge without effective advertising. The target audience is normally the focus when planning for and advertisement. The effectiveness of an advertisement therefore depends on the method used to reach the target audience. Creativity is very important when designing for an advertisement. Originality, artistic, attractiveness, are some of the attributes a good advertisement should posses. It’s said that what people see or hear captures their psyche and this leads to preferences change. When advertisement is done on a regular basis, higher demand for goods and services is generated which by extension demands for equivalent supply of the goods or services demanded. Demand and supply dynamics should be monitored carefully, so that they remain at equilibrium always. Promotion is found in nearly all places imaginable and where one least expects it.   Some advertisements are very conspicuous and divergent, while others may be faint but the human eye tends to take notice of them. Costs of promoting goods and services are more often than not catered for by sponsors who use various traditional media initially identified such as use of newspapers, magazines, television commercials, radio advertisements, outdoor advertising, direct mail or new media such as blogs,