Sample Term Paper
The article analyzed here explains how cognitive dissonance creates a problem for behavioral finance. The author presents his views by comparing the traditional and behavioral theories of finance. He suggests that since people are reluctant to change their current beliefs they do not put in much effort to reduce cognitive dissonance in cases where behavior patterns are challenged.
Olsen highlights many flaws which are present in the traditional finance theories through an analysis of several traditional models and themes. Several advantages of applying behavioral finance models in place of traditional theories have been outlined in the article. The author concludes with an implication that problems arising out of cognitive dissonance in behavioral finance have to be resolved by implementing corrections through external instruments such as peer reviewed articles.
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