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Emerging Trends and AI Technologies

In: Demystifying Behavioral Finance

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  • Kok Loang Ooi

    (University of Malaya)

Abstract

Chapter 9 examines the disruptive influence of new technologies, especially artificial intelligence, on behavioural finance. This chapter analyses the impact of AI-driven techniques, including sentiment analysis, machine learning, and natural language processing, on investing strategies, market forecasting, and risk management. By interpreting investor mood and examining behavioural patterns, these tools provide unparalleled insights into the psychological factors influencing market dynamics. This chapter examines the behavioural consequences of high-frequency trading and robo-advisors, highlighting their dual capacity to alleviate and exacerbate cognitive biases including herding and overreaction. Furthermore, blockchain technologies and decentralised finance (DeFi) are examined for their capacity to diminish information asymmetry and enhance transparency in financial markets. Chapter 9 elucidates the convergence of technological innovations and psychological principles inside contemporary finance. It highlights the ethical and structural difficulties presented by new technologies, including algorithmic prejudice and the perpetuation of behavioural inefficiencies. The chapter asserts that AI and associated breakthroughs are essential to the advancement of behavioural finance, providing a framework for the amalgamation of technology with human-centred financial models to improve decision-making and market stability.

Suggested Citation

  • Kok Loang Ooi, 2024. "Emerging Trends and AI Technologies," Springer Books, in: Demystifying Behavioral Finance, chapter 0, pages 115-126, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-2690-8_9
    DOI: 10.1007/978-981-96-2690-8_9
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