This chapter discusses personal financial planning, which is an interdisciplinary practice that employs a six-step process to develop integrated strategies for individuals and families to efficiently mobilize their human and financial capital to achieve their life goals. Financial planning draws...

In recent decades, trading has become very popular among retail investors, mainly owing to widespread use of technology and a reduction in transaction costs. However, the growing information available to individuals and the higher complexity of financial markets have led investors to make...

In the oversight of most funds, the portfolio manager holds the key decision-making power. Often regarded as foundational to the investment process, a few select managers can attract billions of dollars from investors, giving the managers increased prominence, credibility, and compensation....

This chapter focuses on the attitude of investors toward financial gains and losses and their decisions on wealth allocation, and how these changes are subject to behavioral factors. The focal point is the integration of behavioral elements into the classic portfolio optimization. Individual...

Asset allocation and portfolio diversification decisions have important welfare and policy implications. This chapter reviews studies that examine three key aspects of financial investing: participation in stock markets, portfolio diversification, and trading behavior. Standard finance theory...

Counterfactual conditionals are cognitive tools that we incessantly use during our lives for judgments, evaluations, decisions. Counterfactuals are used for defining concepts as well; an instance of this is attested by the notions of opportunity cost and excess profit (residual income), two...

The methodological individualism and subjectivism of the Austrian tradition in economics is often associated with a methodological dualism, i.e. the claim that the nature of its subject matter, namely purposeful and intentional human action, requires economics to adopt a methodology that is...

Psychologische Studien belegen vielfältige Abweichungen menschlicher Denk- und Verhaltensweisen von den üblichen Rationalitätsannahmen ökonomischer Modelle. Die traditionelle Ökonomie begegnet diesen Hinweisen begrenzter Rationalität mit Zurückhaltung, auch wenn derartige Ansätze...

We show how time-dependent macroeconomic response follows from microeconomic dynamics using linear response theory and a time-correlation formalism. This theory provides a straightforward approach to time-dependent macroeconomic model construction that preserves the heterogeneity and complex...