Psychological Approaches applied on Financial Markets

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Exploring the intersection of psychology and finance, this thesis examines the inadequacies of classical economic theories in explaining financial bubbles. It argues for a behavioral approach that unites various models to better understand these phenomena, emphasizing their significant impact on the economy. By presenting empirical studies and highlighting inconsistencies in traditional theories, the work illustrates how human behavior contributes to errors in financial markets, ultimately leading to the formation of bubbles. Understanding these dynamics is crucial for effective intervention.