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Behavioral Finance: explain the late 1990s dot-com bubble using behavioral finance concepts

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the attached file is the instruction for the essay, thank you. Please incorporate financial theories mentioned below in the essays much as possible  Course material: 3books  1) Thaler, Richard – Misbehaving 2) Montier, James – The Little Book of Behavioral Investing 3) Hagstrom, Robert – Investing: The Last Liberal Art Topics included:  – Review of economic/financial history. How did we go from the political economy of Adam Smith & al. to the Bentham and Mills’ utilitarianism based on happiness before incorporating the utility theory to get to the Victorian economic theories of rationality? Review of the modern financial theories that focus solely on rationality and their applications (Efficient Market Hypothesis, CAPM, Modern Portfolio Theory) – Assumptions for these models to work. – Strengths and weaknesses of these models when used in the real world. Cognitive & emotional biases and applications to finance – Topics From Kahneman – Thinking Fast and Slow (book is not required reading this semester) – Prospect Theory – Broad vs. narrow framing Broad behavioral concepts applied to the current environment (subject to changes) – Forecasting – How ideas are formed – Group vs. individual decisions – Pseudoscience – Meeting company management – Beauty contest – Bubbles – Reactive vs. proactive research – Objective vs. subjective views – Creative research – Social contagion (theories, ideas…) – Value vs. growth investing

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Phyllis Mugure

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