Explore BrainMass

“Behavioral Finance at JPMorgan” Case Analysis

1. Rewrite the conceptual (the no-quantitative) portion of the JP Morgan case by discussing all the Behavioral phenomena not identified in the Case study . In your rewrite, make sure to just briefly explain each phenomenon/factor first, and provide an example or explanation of your own similar to the case's "Everyday Examples of --" (those examples are highlighted in yellow in the JP Morgan case in the exhibits part toward the end of the case.) In your rewritten case you may just refer to the specific Exhibits or Figures in the main case instead of recreating those exhibits, figures, etc in your rewrite.

2. Close the rewritten case by adding a conclusion at the end in which you explain how the rewritten case can help investment decision making.

"Behavioral Finance at JPMorgan"
by Malcolm P. Baker, Aldo Sesia

© BrainMass Inc. brainmass.com July 16, 2018, 12:51 pm ad1c9bdddf

Solution Preview

Behavioral Finance in JP Morgan:

JP Morgan is among the leading investment firms that provide investment products with their marketing strategies and investment philosophy in asset management strongly grounded in behavioral finance. The asset management team believes that understanding human and investor behavior and behavioral biases are the key to generating higher returns for their clients and also advising them on effective investment decisions (Baker & Sesia, 2007). This paper discusses some behavioral phenomena in JP Morgan not identified in the JP Morgan case study providing examples of each.

Behavioral phenomena in JP Morgan:

Aside from the behavioral biases identified in the case study, these are, overconfidence, loss aversion, recency, and anchoring, there are other behavioral phenomena that JP Morgan also emphasizes in analyzing investor behavior and decisions. These are mental accounting, Gamblers Fallacy, Confirmation and Hindsight Bias, Herd Behavior, Overreactions and Availability behavior, and Representativeness.

Mental Accounting is that behavior where individuals have the tendency of separating their money into separate parts based on certain set criteria such as the intention of different portions of the money or the source of money. Often individuals give different functions to each part of separated cash and this often influences their consumption patterns and investment decisions (Sewell, 2010).

For instance, individuals with Mental Accounting behavior bias ...

Solution Summary

The following posting answers discussion questions for a behavioral finance case study.

investment decision making,