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

This book chapter 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 polarization 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