finance

ppt/slides/slide2.xml

RESEARCH question How does the presence of herd behaviour influence the price dynamics of financial assets in capital markets, and to what extent do psychological factors contribute to the manifestation of herd behaviour among investors? Financial market price dynamics can be considerably impacted by herd behaviour, especially in times of extreme volatility. When investors behave like a herd, they usually follow the herd's lead without questioning the logic or underlying principles of the movement. Exaggerated price changes and heightened market volatility may result from this. Herd behaviour frequently gets stronger during uncertain or fast-moving markets because investors look for safety in numbers or worry about losing out on possible gains. Asset bubbles and crashes may result from prices detaching from intrinsic values as more investors follow suit. Investors who witness others making money may get afraid of falling behind. Because everyone else is doing it, this may cause them to make investments in assets without conducting adequate research. Information that supports preexisting beliefs is typically sought after by people. During a bull market, investors may overlook possible risks in favour of good news. Investors are susceptible to the views and behaviour of others, particularly those they consider to be knowledgeable or successful.