Η prospect theory και τιμές μετοχών κατά την διάρκεια της πανδημίας COVID-19
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Keywords
Prospect theory ; Επενδυτική ψυχολογία ; Επενδυτικές επιλογές ; COVID-19Abstract
This paper examines Prospect Theory and whether this theory can be applied to provide a framework for explaining investment decision-making during the Covid-19 pandemic. Three countries with developed capital markets are used as a reference - namely the USA, the United Kingdom and France.
The paper first reviews the theory of perspective and its basic principles, while then examines the effect of investor psychology, as reflected by the indicators of variability and over / under reaction to the evolution of the pandemic. The survey examines five stock indices and finds that investors had a strong risk aversion during the first period of the outbreak of the pandemic, which is justified by the theory of perspective, given that there was a significant ignorance about the evolution of the pandemic, which made investors to abstain from investing, even by selling the securities at a loss. However. During the pandemic, and especially after the advent of vaccines, investors took a more positive stance, which is justified by the theory of perspective, as they considered that the risks are now more measurable.
Overall, the paper shows that, contrary to the theory of a fully efficient market and perfectly rational investors whose only criterion is profit maximization, investment psychology has a significant impact on investment decisions, and therefore on the formation of financial market prices.