What Is Behavioral Economics? Behavioral Economics is the study of psychology as it relates to the economic decision-making processes of individuals and institutions. Behavioral economics is often related with normative economics. It draws on psychology and economics to explore why people sometimes make irrational decisions, and why and how their behavior does not follow the
What Is Behavioral Finance? Behavioral finance, a subfield of behavioral economics, proposes that psychological influences and biases affect the financial behaviors of investors and financial practitioners. Moreover, influences and biases can be the source for the explanation of all types of market anomalies and specifically market anomalies in the stock market, such as severe rises
What Are Behavioral Funds? Behavioral funds are a category of mutual funds that use behavioral finance as a basis for their investment strategy. Managers of behavioral funds believe that human behavior leads to certain market inefficiencies. Investors can take advantage of these market inefficiencies to get a superior return. Behavioral funds are seeing increased interest
What Is a Behaviorist? A behaviorist is an adherent of the theories of behavioral economics and finance, which hold that investors and other market participants neither behave in a rational manner nor in their own best interests. Investing decisions, like all human activity, are subject to a complicated mix of emotion, environment, and bias. The
What is Behavioral Modeling? Behavioral modeling is an approach used by companies to better understand and predict consumer actions. Behavioral modeling uses available consumer and business spending data to estimate future behavior in specific circumstances. Behavioral modeling is used by financial institutions to estimate the risk associated with providing funds to an individual or business
What Is the Beige Book? The Beige Book is a report produced and published by the Federal Reserve. The report, referred to formally as the Summary of Commentary on Current Economic Conditions, is a qualitative review of economic conditions. The Beige Book is published eight times each year before meetings held by the Federal Open
What Is Belly Up? “Belly up” is an idiomatic expression in American English used to describe a business, organization, or institution that has ceased to exist or gone bankrupt. The phrase is a metaphor comparing the business in question to dead fish or another animal that has floated to the top of a body of
What Is Below Full Employment Equilibrium? Below full employment equilibrium is a macroeconomic term used to describe a situation where an economy’s short-run real gross domestic product (GDP) is lower than that same economy’s long-run potential real GDP. Under this scenario, there is a recessionary gap between the two levels of GDP (measured by the
What Is a Below-Market Interest Rate (BMIR)? A below-market interest rate (BMIR) is a rate that is below the prevailing commercial bank interest rate in effect at that time. Loans given under BMIR terms involve an interest rate below the applicable federal rate or may even involve no interest rate. A BMIR applies to a
What Is Below Par? Below par is a term describing a bond whose market price is trading below its face value or principal value, usually $1,000. Bonds are debt instruments that are usually issued by corporations and governments to raise money. When an investor purchases a bond, the price paid for it is called the
