Keynote Address: Brain Science Perspectives on Investor Behavior and Decision-Making Errors
19 Pages Posted: 29 May 2018 Last revised: 6 Jun 2018
Date Written: June 1, 2017
Time horizons for maximizing the value of an investment vary among individuals in surprisingly wide, imperfectly predictable, and often seemingly irrational ways. Problems ensue.
A deeper understanding of the causes of this variation might aid in the planning and design of legal and corporate policies.
Consequently, this article provides brain science perspectives on:
1) Why does the brain discount time?; and
2) How does the brain discount time?
The article is based on a Keynote Address at the Berle IX Symposium on Investor Time Horizons.
Keywords: corporations, corporate law, investor psychology, decision-making errors, behavioral economics, cognitive heuristics and biases, time horizons, time discounting, neuroscience, psychology, evolutionary biology, behavioral biology, cognitive science, time-shifted rationality, brain science
JEL Classification: B25, D8, D80, D81, D9, D90, D92, D99, K00, K2, K11, K20, K22, K23
Suggested Citation: Suggested Citation