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The Role of Group Psychology in Behavioural Finance: A Research Starting Point for Banking, Economic, and Financial Historians

In: Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century

Author

Listed:
  • Victor Ricciardi

    (Goucher College)

Abstract

This paper discusses the significance of group psychology within the field of behavioural finance in order to provide a starting point for researchers in banking, economic, and financial history. Some of the major themes of behavioural finance are presented, including overconfidence, representativeness, anchoring, worry, and herd behaviour. The other major portion of this piece examines group behaviour within the investment decision-making process, drawing on the social sciences (largely social psychology) to consider the topics of group polarisation and groupthink. The author provides an overview of each topic to encourage researchers to investigate these important issues as potential causes of historical events within banking, economics, and finance. Of course there are limitations to applying behavioural finance theories and themes to historical research. Historians should investigate these potentially new ideas with a degree of caution.

Suggested Citation

  • Victor Ricciardi, 2017. "The Role of Group Psychology in Behavioural Finance: A Research Starting Point for Banking, Economic, and Financial Historians," Palgrave Studies in the History of Finance, in: Korinna Schönhärl (ed.), Decision Taking, Confidence and Risk Management in Banks from Early Modernity to the 20th Century, pages 269-292, Palgrave Macmillan.
    • Handle: RePEc:pal:psitcp:978-3-319-42076-9_12
    DOI: 10.1007/978-3-319-42076-9_12
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