Abstract
This paper is an effort to understand the behavior of securities markets and their implications for the economy within the wider perspective of behavioral finance. Behavioral finance is a pragmatic, practical and positivist approach to study financial decision-making. It attempts to explain the aspects of finance and investing, from a human perspective. Behaviorism is intended to observation and understanding of the realities in every field of decision-making in a deeper manner than the oversimplified and overgeneralized conventional mathematical modeling with limited and even fallacious assumptions which are many times inadequately representative of the real life scenario. Conventional economists recommend superficial reforms that only postpone the malady, which in the end returns with greater horror. In other words, short-run fluctuations are curtailed, but cumulative long run fluctuations increase. These policies, rather than stabilize the economy, add to its problems in the long run. But now superficial measures aren?t producing even the short-run results. The economists started speculating a few days earlier that the years 2019-21 are going to initiate depression worldwide with the US-China trade tensions, global warming, changed weather patterns and due to actions of the governments of advanced economies promoting distributive inequity the world is now having. There started strong indications from the automobile and financial sectors in the late 2019. This is taken as part of the 30 year cycle by Sarkar and Batra as detailed in the paper with reference to the position if crashing economies, stagflation, decreasing economic activities and decreasing employment and due to Corona pandemic. Assessment upto 2036 has been made further. The systemic linkages in a progressive economy can be better understood and utilized in a highly fruitful and effective way for betterment, of all under the tenets of behavioral finance. Behavioral measures based on law of social cycle and collective psychology can reduce the amplitude of violent fluctuations of the economy significantly for a very long time and ensure its smooth & harmonious movement. But they would not eliminate these fluctuations. Nor is it desirable because straight-line evolution is not possible for any entity no matter what. For smooth functioning of the production structure the smooth flow of money requires to be ensured.
Keywords
Behaviourism, Bounded Rationality perspective, Law of Social Cycle, Systaltic Motion, Collective psychology, Socionomics.
Citations
IRE Journals:
Kalpana Singh , Prof R P Singh
"Behavioral Perspective Of Economic Slowdown & Market Upheavals" Iconic Research And Engineering Journals Volume 3 Issue 9 2020 Page 110-118
IEEE:
Kalpana Singh , Prof R P Singh
"Behavioral Perspective Of Economic Slowdown & Market Upheavals" Iconic Research And Engineering Journals, 3(9)
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