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    Boom and Bust Cycle 1

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    ABHISHEK SHARMA
    The document discusses the boom and bust economic cycle and behavioral indicators related to it. The boom and bust cycle involves alternating phases of economic growth (boom) and decline (bust) in capitalist economies. During booms, the economy grows and jobs are plentiful, while busts see economic contraction, job losses, and reduced investor returns. Behavioral indicators provide insight into investor psychology during these cycles and include cognitive biases, social factors, and behavioral tendencies that can influence irrational or biased decision making.

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    Boom and Bust Cycle 1

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    ABHISHEK SHARMA
    27 views11 pages
    The document discusses the boom and bust economic cycle and behavioral indicators related to it. The boom and bust cycle involves alternating phases of economic growth (boom) and decline (bust) in capitalist economies. During booms, the economy grows and jobs are plentiful, while busts see economic contraction, job losses, and reduced investor returns. Behavioral indicators provide insight into investor psychology during these cycles and include cognitive biases, social factors, and behavioral tendencies that can influence irrational or biased decision making.

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    BOOM AND BUST CYCLE 1 (1)

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    The document discusses the boom and bust economic cycle and behavioral indicators related to it. The boom and bust cycle involves alternating phases of economic growth (boom) and decline (bust) in capitalist economies. During booms, the economy grows and jobs are plentiful, while busts see economic contraction, job losses, and reduced investor returns. Behavioral indicators provide insight into investor psychology during these cycles and include cognitive biases, social factors, and behavioral tendencies that can influence irrational or biased decision making.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    27 views11 pages

    Boom and Bust Cycle 1

    Uploaded by

    ABHISHEK SHARMA
    The document discusses the boom and bust economic cycle and behavioral indicators related to it. The boom and bust cycle involves alternating phases of economic growth (boom) and decline (bust) in capitalist economies. During booms, the economy grows and jobs are plentiful, while busts see economic contraction, job losses, and reduced investor returns. Behavioral indicators provide insight into investor psychology during these cycles and include cognitive biases, social factors, and behavioral tendencies that can influence irrational or biased decision making.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    BOOM AND BUST CYCLE

    BEHAVIORAL INDICATORS

    Submitted to-: Prof. Nirali Madam


    THE TEAM

    Zeel Patel - IU2152000024


    Dhruvi Khatiria - IU2155550018
    Poojan Mantri - IU2155550049

    2
    WHAT IS BOOM AND BUST?

    • The boom and bust cycle is a process • During the boom the economy grows, jobs are
    of economic expansion plentiful and the market brings high returns to
    and contraction that occurs investors. In the subsequent bust the economy
    repeatedly. The boom and bust cycle shrinks, people lose their jobs and investors
    is a key characteristic of capitalist
    lose money. Boom-bust cycles last for varying
    economies and is sometimes
    lengths of time; they also vary in severity.
    synonymous with the business cycle.

    3
    KEY TAKEAWAYS
    • The boom and bust cycle describes alternating phases of
    economic growth and decline typically found in modern
    capitalist economies.
    • First anticipated by Karl Marx in the 19th century, the boom
    bust cycle is driven just as much by investor and consumer
    psychology as it is by market and economic fundamentals.

    4
    BOOM AND BUST CYCLE DIGRAM

    5
    WHAT ARE BEHAVIOURAL INDICATORS?

    • Behavioural finance is the study of the influence of psychology


    on the behaviour of investors or financial analysts. It also
    includes the subsequent effects on the markets. It focuses on
    the fact that investors are not always rational, have limits to
    their self-control, and are influenced by their own biases

    6
    BEHAVIORAL INDICATORS

    SOCIAL

    BEHAVIORAL

    APPLIED

    EDUCATIONAL

    COGNITIVE

    7
    BEHAVIORAL INDICATORS OF COGNITIVE

    Cognitive biases generally involve decision making based on


    established concepts that may or may not be accurate. Think
    of a cognitive bias as a rule of thumb that may or may not be
    factual.
    We’ve all seen movies where a thief wears a police uniform
    to pass through a security checkpoint. The real police officers
    assume that because the person is wearing a uniform like
    theirs, he must be a real police officer. That’s an example of
    a cognitive bias.

    8
    BEHAVIORAL INDICATORS OF SOCIAL FACTORS

    While much of behavioural economics has been driven by cognitive


    psychology, economic sociology indicates that there are also supra-
    individual forces at work that drive investor behaviour. For instance, people
    are more conservative when making investment decisions on behalf of
    close others. Moreover, investors became even more conservative with
    Click icon to add picture

    investments made in accounts that had culturally-salient labels such as


    "retirement" or "college savings.“

    9
    BEHAVIORAL INDICATORS OF BEHAVIORAL

    Investors are treated as “normal” not “rational”


    They actually have limits to their self-control
    Investors are influenced by their own biases
    Investors make cognitive errors that can lead to wrong
    Click icon to add picture

    decisions

    10
    THANK YOU!

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