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Cognitive finance: Behavioural strategies of spending, saving, and investing.

Otto, P.E.; (2007) Cognitive finance: Behavioural strategies of spending, saving, and investing. Doctoral thesis , University of London. Green open access

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Research in economics is increasingly open to empirical results. The advances in behavioural approaches are expanded here by applying cognitive methods to financial questions. The field of "cognitive finance" is approached by the exploration of decision strategies in the financial settings of spending, saving, and investing. Individual strategies in these different domains are searched for and elaborated to derive explanations for observed irregularities in financial decision making. Strong context-dependency and adaptive learning form the basis for this cognition-based approach to finance. Experiments, ratings, and real world data analysis are carried out in specific financial settings, combining different research methods to improve the understanding of natural financial behaviour. People use various strategies in the domains of spending, saving, and investing. Specific spending profiles can be elaborated for a better understanding of individual spending differences. It was found that people differ along four dimensions of spending, which can be labelled: General Leisure, Regular Maintenance, Risk Orientation, and Future Orientation. Saving behaviour is strongly dependent on how people mentally structure their finance and on their self-control attitude towards decision space restrictions, environmental cues, and contingency structures. Investment strategies depend on how companies, in which investments are placed, are evaluated on factors such as Honesty, Prestige, Innovation, and Power. Further on, different information integration strategies can be learned in decision situations with direct feedback. The mapping of cognitive processes in financial decision making is discussed and adaptive learning mechanisms are proposed for the observed behavioural differences. The construal of a "financial personality" is proposed in accordance with other dimensions of personality measures, to better acknowledge and predict variations in financial behaviour. This perspective enriches economic theories and provides a useful ground for improving individual financial services.

Type: Thesis (Doctoral)
Title: Cognitive finance: Behavioural strategies of spending, saving, and investing.
Identifier: PQ ETD:592281
Open access status: An open access version is available from UCL Discovery
Language: English
Additional information: Thesis digitised by ProQuest. Third party copyright material has been removed from the ethesis
UCL classification: UCL > Provost and Vice Provost Offices > School of Life and Medical Sciences > Faculty of Brain Sciences > Div of Psychology and Lang Sciences
URI: https://discovery.ucl.ac.uk/id/eprint/1444969
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