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IOP3708 ASSIGNMENT 7 SEMESTER 2 2025 Introduction The study of behavioural finance bridges the gap between traditional economic theory and the complex realities of human psychology in financial decision-making. Traditional finance assumes that investors

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IOP3708 ASSIGNMENT 7 SEMESTER 2 2025 The study of behavioural finance bridges the gap between traditional economic theory and the complex realities of human psychology in financial decision-making. Traditional finance assumes that investors are rational actors who process information efficiently and always act to maximise utility. However, behavioural and neurofinance research demonstrates that real-world investors are influenced by a combination of emotions, cognitive biases, and psychological dispositions that shape their perceptions of risk and return (Ackert & Deaves, 2010). Two critical theoretical frameworks that deepen this understanding are the Triunity Theory of the Market and the Myers-Briggs Type Indicator (MBTI). The Triunity Theory explores how market behaviour mirrors the human brain’s interrelated dynamics of mood, mind, and body, while the MBTI helps explain individual differences in money attitudes and investment decisions based on personality traits. This essay critically discusses both frameworks, highlighting how they explain investor behaviour, influence market focus and research methods, and contribute to investor education and professional practice.

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Uploaded on
October 23, 2025
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Written in
2025/2026
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Essay
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