B - School News

 

Guest Lecture on Behavioral Finance by Mr. Parag Parikh at IIM Indore
October 01, 2005
"Behavioral Finance - Demystifying the Stock Market"

"Pain from a loss is three times the pleasure from profit of the same quantum and nature."

This was one of the interesting things that the participants of IIM Indore learnt during an interactive session organized on campus by Equit-I, the Finance & Investments Club of the Indian Institute of Management, Indore. The session was on behavioral finance, titled "Behavioral Finance - Demystifying the Stock Market". The Speaker was Mr. Parag Parikh, Member of the Bombay Stock Exchange.

About Behavioral Finance

Behavioral Finance is the study of the influence of psychology on the behavior of financial practitioners and its subsequent effect on the markets. It attempts to better understand and explain how emotions and cognitive errors influence investors and the decision-making process. Behavioral financing is believed by many as an effective tool to explain the efficiency of financial markets, stock market anomalies, market bubbles, and crashes.

About the Seminar

The seminar was divided into three different and interactive sessions with each session building on the previous sessions and further clearing the clouds from over the ever-so-inscrutable stock markets.

Session I
The seminar began with the first session as an introduction to the stock exchanges and behavioral finance which threw light on a variety of topics ranging from the differences between investments and speculations, to new theories like prospect theory, decision paralysis and the endowment effect. All these theories are the reasons why people get trapped by the vagaries of the stock market.

Next


Contributed by -
Shiv Dewan,
Secretary,
Media & Publications Committee,
IIM Indore.