Submitted by Nicholas Colas of DataTrek
Behavioral finance is an especially important topic during choppy markets. Today we review new work in the discipline that shows why people tend to make risky decisions even when they know the odds are against them, or avoid risky decisions even if the odds are favorable. More on that and what it means for the current volatile market environment below.
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In volatile markets such as now, good risk management is essential for traders and investors...