Reflections and application of behavioral finance in Pakistan : viewed through prospect theory

Abstract

The intention of this study is to establish the existence of the prospect theory, a component of Behavioral Finance, and develop an understanding of its features in Pakistan. While behavioral finance is renowned principle in the West, its existence and implications in Pakistan have yet to be studied. The objective of this research is to ascertain the existence of the prospect theory in the society and examine its correlation with studies conducted outside the nation. Through careful study of both primary and secondary research, this paper helps determine whether behavioral finance is a concept not only in existing within developed countries. Given the economic conditions of the country, it would be interesting to see if there exists a correlation that may help us better understand the society and local perception of gain and loss. This study is designed to help set up an effort to study decision making traits and analyze the perception of joy and pain, in regards to financial gain and loss, respectively.