FI 311 Assignment 11

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Michigan State University *

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311

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Psychology

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Apr 3, 2024

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Mark Potts FI 311 Assignment 11 Please watch "Mind over Money” by PBS's NOVA. After you watch the movie, please write a response discussing how you have observed in your own life or those of people you know/have observed exhibiting the behaviors discussed in the film. Please weave into your response course concepts and discuss your thoughts on traditional versus behavioral finance. Video Link:    https://www.youtube.com/watch?v=tW_SNz1zNEM The film talks about how feelings affect decision-making reminded me of a time on my 21st birthday when I went to the Turtle Creek Casino in Traverse City. I took $100, hoping to win more. I played the slot machines, and soon I had only $20 left. Rather than making the rational economic decision to cut my losses and leave, I let my emotions guide me. I wanted to get back what I had lost, and that feeling took over. The desire to recover what I lost overshadowed the rational understanding that each spin was independent, unaffected by past outcomes. This deviation from rational economic behavior perfectly mirrored the phenomena discussed in the film. Reflecting on this experience, I recognize how emotions, especially fear of loss and hope for gain, influenced my actions more than a purely logical consideration of money. The casino's atmosphere, designed for excitement and anticipation, mirrors the behavioral biases discussed in the film, akin to the financial crises of 1929 and 2008. My experience aligns with the movie's exploration of how emotions impact financial decisions, highlighting that real-life money choices often lack strict logic. The film reminded me that we should think about both money rules and how people really feel and act. In the context of traditional versus behavioral finance, my personal experience reinforces the relevance of incorporating behavioral aspects into economic models. It shows that real-world financial decisions often stray from the rational expectations set by traditional economic theories. Overall, this reinforces the need for a comprehensive understanding that considers the psychological nuances influencing financial choices.
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