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Author(s): A. Dioba

Journal: Economics of Development
ISSN 1683-1942

Volume: 66;
Issue: 2;
Start page: 78;
Date: 2013;
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Keywords: financial psychology | prospect theory | behavioral economics | irrational behavior | industrial enterprises

Today’s enterprise management should focus more acutely on reasons why manages make the decisions they do and whether behavior needs to be modified or adapted. If they manage successfully to accomplish this task, the planned company results will be achieved. This determines the urgency of behavioral method application within the course of finance decision-making processes at Ukrainian enterprises.Taking this into account the purpose of the article lies in theoretical and methodical justification of feasibility of using the methods of behavioral finance in enterprise management.The of behavioral finance investigates the psychological and sociological issues that impact the decision-making process of individuals, groups, and organizations. It should be noted when studying concepts of behavioral finance, traditional finance is still the centerpiece, though the behavioral aspects of psychology and sociology are integral catalysts within this field of study. Behavioral finance commonly can be defined as "the application of psychology to finance".The foundation of behavioral finance can be considered as the prospect theory. This theory holds that there are persistent biases motivated by psychological factors that influence managers’ choices under conditions of uncertainty. Enterprise activity is associated with uncertainty and risk. Therefore, it is appropriate to use decomposition methods of the prospect theory and the theory of expected utility, intended for decision analysis under uncertainty.

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