Professional Documents
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Psychology of Investors
Psychology of Investors
Psychology: concept,
nature and importance
LEARNING OBJECTIVES
Explain the concept of psychology
and cognitive psychology
Explain the nature of psychology
Describe the psychology of financial
markets
Explain the psychology of investor
behaviour
PSYCHOLOGY: Concept
The word, psychology is derived from two Greek
words, psyche and logos. Psyche means soul
and logos means science. Thus, psychology was
first defined as the science of soul.
Psychology is concerned with all aspects of
behaviour and with the thoughts, feelings, and
motivations underlying that behaviour. It keeps its
importance both as an academic discipline and a
vital professional practice.
PSYCHOLOGY: Definition
Traditional definition of psychology
Psychology as the science of mental processes by William
James (1892).
Modern definition of psychology
Psychology as the science of the inner world by James
Sully (1884).
Psychology as the science which studies the internal
experiences by Wilhelm Wundt (1892).
Psychology as the science of behaviour by William Mc
Dugall (1905).
Science of behaviour and experiences on human beings
by B F Skinner.
PSYCHOLOGY: Branches
Social Psychology
Behavioral Psychology
Physiological Psychology
Applied Psychology
Educational Psychology
Cognitive Psychology
Social Psychology
Social Psychology is the field of
Psychology which studies the
behaviour of society as a whole
,considering the physiological and
biological factors of the society. For
example
Studying the behaviour of children
brought up in refugee camps
Behavioral Psychology
Behavioral Psychology is also known
as behavioursim . This field of
Psychology believes in conditional
learning of behaviour over a period
of time
Physiological Psychology
Physiological Psychology is a field
related to neurophysiology, which is
the study of relation between
behaviour and body system like the
nervous system and endocrine
system.
Applied Psychology
& Educational Psychology
Applied Psychology:
Applied Psychology use the
knowledge gained from this research
in a wide range of settings. Applied
Psychologists help people with all
sorts of problems working with them
to bring about change with e sort of
problems working with them to bring
about change for the better.
Educational Psychology
Educational Psychology
concentrates on those aspects of the
psychic activity that have to do with
learning.
Cognitive Psychology
Cognitive Psychology revolves
around the notion of what makes
people think the way they do so and
also to figure out what processes are
actually going on their minds. The
main areas of study in cognitive
psychology are : perception
,attention ,memory and language.
The first ,perception is concerned
with the way a human being acquires
The second ,attention ,is concerned with
acquisition .The third ,memory, is concerned
with organizing and retaining knowledge and
the final area ,language ,is concerned with the
knowledge is being used .
Perception,memory,speech and thinking are
the main subjects of this branch. The study of
emotion and the study of personality are two
related field that delve into the profound
questions of why we are different and why we
feel and how we feel.
PSYCHOLOGY: Nature
Psychology as Science
There is consensus that the subject of psychology is a science
as it is an objective study of the human brain. In the process of
attaining the objective, psychologists use experiments,
observations, and various empirical evidences.
In science, the objective is pre-identified in a set of activities
and so also in the field of psychology.
Hence, psychology is widely accepted as a science.
Psychology as Natural Science
Psychology is seen as a natural science because while dealing
with human beings, the psychologist needs to behave in his
most natural manner. This behaviour should be
similar to the way a biologist deals with the subject.
Psychology as Social Science
As psychologists deal with the study of human
behaviour and society, psychology can justifiably be
called a social science.
Market Psychology
Market psychology is defined as the overall sentiment of the
market. Optimism, pessimism, fear, greed, and various cycles of
market are study areas of market psychology.
Market psychology works on the concept of behavioral analysis
of financial markets, which was proposed by James Gregory
Savoldi.