Gatorade †Marketing Project Essay

The Gatorade Company makes the world’s leading sports drink. In part, this is due to its ubiquitous marketing strategies that can be seen almost everywhere. Gatorade is the official sports drink of the NBA, WNBA, MLB, NHL and MLS. It is also the official sports drink of the NFL and has become part of a famous tradition, the â€Å"Gatorade Dunk† where the winning athletes of the Super Bowl empty the Gatorade cooler over the coach. Gatorade has also been advertised by some of the greatest athletes in history; from Serena Williams, to Peyton Manning, to Olympic gold medalist Usain Bolt, to probably the most famous endorser in NBA great Michael Jordan. Gatorade makes several products including the G series which consists of pre-game, thirst quencher and post-game beverages. There is also the G Series Pro which consists mainly of sports nutrition products. Then there is G Natural which contains more natural ingredients. The Gatorade Company also makes Propel Fitness Water. The Gatorade Company was not always such a large company nor was it created by an existing beverage corporation. It was created as a necessity by the team in which it’s named after: The University of Florida Gators. Gatorade was created in 1965 by a team of five scientists led by Dr. Robert Cade. The beverage was created to improve the athletic performance of the university’s football team. When more than a dozen of the players had fallen sick due to dehydration from the intense heat and training, the scientists researched dehydration and what the body loses during immense activity. They found out that sugars, salts and minerals were required to hydrate the human body after immense physical activity; water alone was not enough. They created an electrolyte-carbohydrate drink and supplied it to the athletes. The results were phenomenal. The Gators were able to outperform their rivals, especially in the latter half of the game where exhaustion seemed to cripple their opponents. The Gators went on to win their first Champion ship and soon after Gatorade was adopted by other sports teams. Supplying the beverage became more and more difficult for the scientists as demand increased, and after failed attempts to commercialize it, Stokely-Van Camp acquired U. S. rights to the drink and Gatorade Inc. was incorporated in Florida in 1967. After much success, the coach of the Florida Gators suggested the winning formula to the coach of the Kansas City Chiefs. The Chiefs were impressed and used throughout the entire season culminating with a Super Bowl victory. Much of the growth of the Gatorade Company occurred when it was acquired by Quaker Oats, which bought Stokely-Van Camp for $220 million in 1983. It was under Quaker Oats that Michael Jordan, who was arguably the most famous and fast rising athlete at the time, became the celebrity spokesperson for the company. Sales skyrocketed and Gatorade was once again the leader as the sports drink market grew to $1 billion by 1994. Also during its ownership by Quaker Oats, the product went global. It was and continues to be sold in numerous countries and several continents successfully. It also expanded its product line to include more flavor varieties. Towards the end of the 1990’s the sports drink market grew to $2 billion. With its consistent success, Gatorade continued to launch new products including Propel Fitness Water. In 2000, PepsiCo, a multinational corporation focusing on beverages and snacks, acquired Quaker Oats for $13 billion. It bought over Quaker Oats primarily for the Gatorade brand, which is still one of the corporation’s largest and most successful divisions. Gatorade continued to grow because it renewed its contract with Michael Jordan, campaigned its â€Å"Is it n you? † ad, and also signed a host of new celebrity athletes. Today, Gatorade has over a dozen plants where it manufactures the products it sells and is still the leader in today’s $3 billion dollar sports drink market. Target Market Description The original target market for Gatorade was sports teams. In fact, it was originally only sold to sports teams. It spread from the Gators football team to other Gators teams such as basketball. It then spread to other college sports teams until finally it reached professional teams in the NFL. It spread team to team until it became the official sports drink of the NFL in 1983 and was used by over 70 divisions and college teams. Sales trends increased with the same rapid pace. In the early 1980’s Gatorade led the $200 million sports drink market. Net sales were recorded at $90 million in 1982 and grew exponentially in the following years. By the mid 1980’s net sales were recorded at $170 million. During the latter half of the 1980’s Gatorade marketed its famous â€Å"Gatorade is Thirst Aid for that deep down body thirst,† this along with televised adds, strategic placing of the product on sidelines during big games and a growing sports drink market raised net sales to nearly $900 million by the end of the decade. The demographics of the Gatorade G Series target market: * Traditionally active males, aged 18 to 25. They can be students, just starting their careers, or well established. * They grew up idolizing many different sports athletes and teams, which still have an influence. * They make a very wide variety of incomes because Gatorade is inexpensive. It could be anywhere from $10,000 to $60,000. * Education could vary also, most have at least high school level education and some have college or above experiences. * These types of consumers may also be interested in other sport-related clothing and accessories. They may be interested in terms such as jerseys, hats, shoes or anything that will show off their allegiance to a team, sport or player. * The G Series’ core target is the 13- to 17-year-old high-school athlete, while G Series Pro’s target is the 16- to 24-year-old who is in the business of being athletic, whether as an elite athlete or personal trainer. A more detailed look at the MRI report gives a great glimpse into the target market for the sports drink industry. As highlighted in the index, 18-24 year olds are the core target market. With an index of 174, that means 74% of that age range are more likely to drink sports drinks. Moving further up the age range, 18-49 year adults provide a tremendous opportunity for this market. As highlighted by their percent down (which indicates the percent of those persons out of everyone that consumes a variable), 78. 2% of the total population that drank sports drinks were of that age group. Capturing the teen consumer has been identified as a priority for the brand, with the CMO of Gatorade, Ms. Robb-O’Hagan, conceding that teens thought the brand was dated. Last year’s shift to G was meant to grab their attention. With that accomplished, she said, the brand has been working with teens to test and promote the new products. Through May, a mobile locker room is making its way to high schools, showcasing the G Series products. â€Å"What we’re focusing on this year, from a marketing standpoint, is making sure that the high-school athlete understands the G Series, understands the three-part series,† Mrs. Robb-O’Hagan said. â€Å"If we land that strongly with the teen consumers, we have a lot of opportunity. A Reporter Report is complete with explanations of key numbers. Please note that all the numbers are based on the 2009 Fall MRI study, and that the projected numbers (000) are expressed in thousands. (Appendix A). Market Trends and Macro Forces According to the Beverage Marketing Corporation, the sports drink industry has actually shrunk in sales by 12. 3% from 2009. Considering that Gatorade holds over a 70% market share of the entire sports drink market, they saw losses in gallons produced by 15. 5% in that same year. In a more local look at the market, from 1986 to 2009, the geometric growth of the industry in America has been 11. 62%. However, considering the great growth for the first 19 years of its existence from 1986 to 2005 of 14. 3%, this number might be misleading. A more accurate picture can be painted by using the last 5 years, letting the state of the economy be fully reflected in growth. In this new scenario, the growth is at -. 27%. Gatorade markets not only to the athlete, but to the casual drinker as well: construction workers, restaurants, and families for dinnertime. Sales records for the sports drink brands for the year 2009 and 2010 are available in the Appendix B. Market Trends Changing Needs Gatorade being a sports drink primarily focuses on the needs of the athletes. The researchers believe that the athletes are looking for pre and post workout drinks. â€Å"The average consumer is already consuming during the before-and-after occasion,† said Sarah Robb-O’Hagan, chief marketing officer at Gatorade. â€Å"Different consumers have different nutritional needs on game day vs. training days. What we’ve seen as we’ve developed these products is different consumers mixing and matching their own regime to meet their needs. † In addition, in order to build long term brand loyalty Gatorade is focusing on target high school students between the ages of 13-17 years. â€Å"What we’re focusing on this year, from a marketing standpoint, is making sure that the high-school athlete understands the G Series, understands the three-part series,† she said. â€Å"If we land that strongly with the teen consumers, we have a lot of opportunity. What are also sparking the changing needs in this market trend are consumers increasingly focusing on their health. They are conscious about the effects of beverages on their own bodies. According to Mintel, a consumer packaged goods monitoring service, some of the product areas with the highest growth were in the sports and meal replacement categories, which place a greater emphasis on nutrition. More beverage companies are focusing their attention on adding new nutritional benefits to their new products, promoting a product’s ability to enhance sports performance. As the consumers are growing increasingly conscious about the contents of the sports drinks and the needs of the athletes are changing, so is the change in formulations of sports drinks. It is getting even more complicated. Sports nutrition companies are looking at low glycemic sugars as functional sugar systems to enhance endurance in certain products. These include newer functional sweeteners, such as isomaltulose and trehalose. Gatorade has risen to this challenge of balancing innovation with market needs. Beverage World selected Gatorade as the Winner for Brand Reinvention when it released the G-Series which includes the three products: Prime, Perform and Recover for before, during and after work out respectively. Macro Forces There are many macro forces that affect the sports drink industry. Among the most toxic is the current state of the economy. As we have discussed earlier, the poor spending power of consumers has shifted demand to less expensive alternatives, such as water or vitamin infused drinks. As the recession begins to lag into the next year, the sports drink industry can expect sales volume to remain at current levels. Given that the U6 rate (the most comprehensive form of unemployment that combines both unemployed and underemployed) is at 17%, discretionary income will continue to be a hindrance on this industry. While our competitor analysis is fully developed in the coming sections, it should be pointed out now that competition plays a significant role in this industry’s macro forces. Currently, there are two main competitors, Gatorade and Powerade, or Pepsi and Coke, respectively. Unfortunately there is no room for consolidation in this domestic saturated market, so the competitive battles that spur between the two eat away at costs and sales. A recent example comes from a lawsuit between these two companies. An article in the Beverage Industry relating to the industry issues reported a clash between Coca-Cola’s Powerade and Pepsi-Cola’s Gatorade on a lawsuit over brand advertising. At issue was a Powerade Option ad that featured a â€Å"drag race† between horse-drawn carts, one of which was carrying 10 bales of hay and the other 50. The message was that 10-calorie Option allowed the 10-bale horse to win the race over the 50-calorie competitor. The lawsuit argued the ad sent the message that Powerade was more effective as a sports drink, as well as containing fewer calories. The matter was resolved in a matter of days, with Coca-Cola agreeing to modify the ad. Such trivial pursuits between the two are costly to the industry and companies themselves. In addition to the direct competitors, sports drinks are facing increased competition from bottled water like Vitamin Water and coconut water and nutritional drinks like skimmed milk and chocolate milk for hydration and nutrition. Coconut water, skimmed milk and chocolate milk are easy to produce and provide natural health benefits compared to the artificial electrolytes in popular sports drinks like Gatorade. While health concerns have had positive effects on the industry, there are also some negatives as well. A new study done by researchers at The University of Iowa suggests that the sports drink Gatorade erodes teeth faster than a carbonated soft drink. â€Å"I don’t think everybody realizes how erosive these things are, especially Gatorade and Red Bull,† Leslie A. Ehlen, a student at the University of Iowa – School of Dentistry tells WebMD. â€Å"People need to be aware that all sorts of beverages can be causing dental erosion. † Of course, this leads right back to another macro force in regulator procedures. Although in know will health issues like this loom over the industry’s ability to sell their products, the F. D. A (food and drug administration) can certainly dampen sales volumes if need be. The F. D. A has recently banned production of Four Loko as it the combination of caffeine and alcohol mix is extremely dangerous.

Shrimp Cultivation

1. Shrimps cultivation has been found to have an impact on the socio-economic and the environment through many studies conducted all over the world. Studies in India showed shrimp cultivation to cost nearly two times the annual earnings of those regions. Moreover the process of shrimp cultivation leads to contamination of fresh water which negatively impact healthy water and reduces the coastal lines which makes coastal regions more prone to hurricanes and tornadoes. 2.The shrimp industry benefits three to four million â€Å"mostly poor† Bangladeshis while providing livelihood directly numbering some 11, 50,000 people. In 2007-2008, a total of 2, 23,095 Metric ton shrimp produced in Bangladesh that contributes 19,567. 90 core taka in the GNP. There is ample demand in the international markets for shrimp and Bangladesh is blessed with an environment friendly for shrimp production. So obviously, the shrimp industry has a huge potential for Bangladesh.Through various studies it w ere also found that shrimp industry did increase the income levels of the people and help them to enjoy a better standard of living. 3. Shrimps cultivation in also observed to have impacts of the social structure which leads to increased migration, social conflict and degradation of health. Moreover, it also cause impact on the bio-diversity, mangrove forest, soil and marine species, salinity, degradation of land and de-stabilization of coastal ecosystems. Bangladesh has been predominantly an agricultural based nation.Degradation of agricultural land will directly affect the food security and livestock of many people. Moreover as Bangladesh is a riverine nation saline waters for shrimp ponds can seep to all the other river bodies and contaminate the waters. 4. Shrimp Industry usually have a limited life-span of about 10 years observed in Bangladesh, Thailand and India. Shrimp farms located in Sunderbands, Khulna, Bhola, Bagerhaat and Barisal also encounter such short life-span. 5. B angladesh shrimp cultivators mostly us extensive to super-intensive shrimp farming techniques.These methods are very harsh and have serious crippling effects on the bio-diversity and the mangrove coastlines. Of about 35% of the world’s mangrove forests have been cleared due to this. 6. Unregulated shrimp farming and improper land zoning legislations have led to social uses such as land grabbing, improper land use and impairment for other fisheries cultivations. Shrimp cultivation have also seen uneven wealth distribution which eventually lead to further societal disputes.

Customer Service VS. Manufacturing Essay

The difference between the manufacturing industry and customer service industy is seen in the marketing performances of both. These days, there are lots of call centers that has been built into different establishments. In fact, there are call center agencies that has been a business alone of big companies around the globe. It’s being used by many entrepreneur and businessman.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Why? Is it because of the weakening appeal of the manufacturing agency? Is the customer service more effective than manufacturing?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   No. It’s not because the manufacturing is weakening, but because of the larger chances or opportunities that the customer service offers than the manufacturing.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In a customer service strategy, if the employee or the customer service representative has the ability or one of the promising and outstanding employees, those who are reliably working, and the company can expect more customer satisfaction from the employee there’s a high risk for the company to get bigger and earn more because what the employee promotes and builds a good customer relationship which is basically needed in a business.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   But this big chance to inspire the company is also a big chance for the company’s failure because it also causes negative feedback from the customer.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   It has been happening in many call center agencies that only few of the call center agents of their employees last because of different kinds of reasons: personal or any, they do not last in the job. The tendency of a customer service’s impact to the business is that, the risk of the transaction between the customer and the company is on the performance of the employee.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Paul Simpson and Dr Vishnu Kanhere (2007) says that â€Å"service, by its nature, deals with intangibles. Auditors should not expect to see much in the way of product. When auditing a reception/security team, for example, it is important to check that they know what is required of them in terms of routine responsibilities, but you can guarantee that no day will be the same and thus you’ll need to see that the team adapts to situations presented to them at any time. The ‘quality’ of the service they provide is down to the individual, their own personal characteristics and the training they have received – a combination of nature and nurture.†   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The risk is to the company to get along with tHe performance of the employee, whether they will show a good performance or not.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In manufacturing, it’s easy thing that what they have just decided to manufacture is only what they will do. The good thing here is the certainty or the assurance of the dealings with the client or the customer. Accuracy, because they the company is woking with tha machines and equipments, so the performanc of those will be based on the command of the people working with it.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   The competition between the customer service and the manufcturing strategy is that, in customer service, there’s an open window for opportunities and good customer relationship. That is only if the employee works nice and with the intention to help for the company’s growth. But if not, it’s a high risk. Gamble, but for sure, companies doesn’t make it to the point that the company is already in danger before they’ll act on it. It’s the quality of the employee’s performance that the company must secure.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In manufacturing, the issue is the quantity of the product to produce because the risk here is that, there are counts on how many is to produce and how many is to be manufactured by the machinery. Aside from the thing that there can not be adjustments sometimes, there are products that are not repeatable to produce. Once that there are damagea at the begining, it’s a continuous process until the edge because the the machineries are systematically programmed and it is already a set up. There is a need to maintain the production quality of the equipments just like the quality that the customer service company must impose on their employees.   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   In an abstract of an article by Slotnick and Sobel (2005), â€Å"Inaccurate production backlog information is a major cause of late deliveries, which can result in penalty fees and loss of reputation. We identify conditions when it is particularly worthwhile to improve an information system to provide good lead-time information. We first analyze a sequential decision process model of lead-time decisions at a firm which manufactures standard products to order, and has complete backlog information.†   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Both of he strategy has it’s problem when it comes to time management for the company’s workers. The only difference is just that, the equipments will be repaired but the an employee will be replaced or terminated. â€Å"†¦this reveals when the partial-information method does well and when it is worth implementing measures to improve information transfer between operations and sales (Slotnick and Sobel, 2005).† REFERENCES: Simpson, Paul., and Dr.   Kanhere, Vishnu. Auditing: service sector vs. manufacturing.   from http://www.irca.org/inform/issue15/Simpson.html// Slotnick, Susan A. and Sobel, Matthew J. (16 June 2005). Manufacturing lead-time rules: Customer retention versus tardiness cost. Production, Manufacturing and Logistics, Volume 163, (Issue 3), Pages 825-856 Director, Product Marketing. (February 2002). Guidelines for   Preparing Customer   Service Standards. Water Industry Asset Management and Standards //www.nrm.qld.gov.au

Overview of the Multiperspectivity of Gender Roles Essay

Overview of the Multiperspectivity of Gender Roles - Essay Example George Orwell’s novel, 1984, puts an indecisive light on women’s role. This paper attempts to explore the multi-perspective gender roles evident in Orwell’s novel, as well as delve in the exciting ambiguity of its feminine elements. Sacrificial Women The protagonist’s (Winston Smith) mother repetitively played the universal nature of the feminine gender -- being self-sacrificing. This sacrifice concept is commonly known to start when a woman marries (i.e., submitting herself to the husband, and using the husband’s family name) or upon conception (e.g., eating nutritious food for the baby’s consumption and not for herself). Roazen, in his essay â€Å"Orwell, Freud, and 1984† strengthened the emphasis of this woman’s role through adding the adverb â€Å"ideally† in describing 1984’s women as â€Å"self-sacrificing creatures† (section V, para. 1). Moreover, Winston explicitly expresses this through his own inte rpretation of his dream: â€Å"he could not remember what had happened, but he knew in his dream that in some way, the lives of his mother and sister had been sacrificed to his own† (Orwell 78). ... Winston goes to say, â€Å"...they were down there because he was up here...† (Orwell 77). However, no matter how saintly it sounds, reading the whole novel will expose to the readers, through Orwell’s narrative style and women’s role, how ambivalent and ambiguous women’s gender-role is. Protagonist-Effectual Though characters aside from the antagonist are used to stimulate events and the protagonist, Orwell effectively used the effectual gender-role of women to rise up that usual effectual mode. Smith pointed out the specifics: 1) Winston’s mother (i.e., her memory) â€Å"encouraged him to desire a more liberal society;† 2) his wife, Katherine, intensified Winston’s detestation of the Party; 3) Julia â€Å"triggered† Winston to finally deviate from the loathsome Big Brother and focus his intellectual pursuit to achieve freedom (1). However, one may argue that Winston’s desires, decisions, or actions were mainly the offsp ring of his rebellious nature and the feminine ‘stimulus’ was nothing but inconsequential. Yet, it is more absurd to dispense the catalytic effect the women characters had on Winston. In reality, though every person has the potential to act as such, this potential is not realized until an effective ‘pushing’ factor motivates the person. This holds true in 1984, and to argue otherwise may probably suggest the unrealistic framing of events and the useless tagging of such feminine encounters. Conformist In Orwell’s narrative, there is this evident contrast of feminine conformity and masculine rebellion. For instance, as Orwell detailed Winston’s dislike of women, since they â€Å"were the most bigoted adherents of the Party, the swallowers of slogans, the

Separation of Complex Cations of Chromium(III) by Ion Exchange Essay - 1

Separation of Complex Cations of Chromium(III) by Ion Exchange Chromatography - Essay Example The relative amount of divinyl-benzene affects the physical properties and solubility of the resins. 9. After the solution is drained to the resin level, the column is washed with HCIO4 until the un-reacted [CrCl2 (H2O) 4] has been eluted to approximately 5 cm3 of the intensely colored fraction and the UV visible spectrum measured. Chromium (III) is the simplest ion that chromium forms in solution. Chromium (III) prefers to form octahedral complexes whose color is determined by the ligands attached to the chromium center. It forms different complexes under different conditions. . Regarding the ion exchange process for Chromium (III), the ion exchange resins used is SO3H group. Aqueous solutions of the complexes trans‑[CrCl2(H2O)4] Cl, [CrCl(H2O)5]Cl2 and [Cr(H2O)6]Cl3 will be isolated in a pure state based on their different affinities for a cationic exchange resin. Only a single beam of UV-VIs is used to determine 10 Dq. They have â€Å"the  ligand field  splitting energy† which helps to determine this easily and quickly. This is because there is no d-d electron transition as the d orbitals are completely filled and UV-VIs bands are not observed (Pantsar-Kallio 1997).   As a result, two bands are observed in the region 350 to 750 nm. This band energy is used to identify and characterize complex ions. The peak tells us that how much energy is absorbed at each wavelength of the UV. The longest wavelength band (distance between two adjacent peaks on graph) of the two has energy approximately equal to 10Dq for the complex ion. The relative crystal field strength of H2O is high than Cl because Cl ligand has a weak field ligand and determines a smaller value of 10 Dq while [Cr (H2O) 6]3+ has the highest 10Dq because there is no Cl ligand in it only H2O is present which is a strong field ligand and determines a higher value of 10 Dq. From the above experiment we may conclude that in the ion exchange method of

MODIGLIANI AND MILLERS ADVICE ON DEBTS IGNORED BY COMPANIES Essay - 1

MODIGLIANI AND MILLERS ADVICE ON DEBTS IGNORED BY COMPANIES - Essay Example Considering the setting of a perfect market, with the absence of frictions, a seminal research conducted by Modigliani and Miller in 1958 proposed that the value of an organization’s market tends to operate in independence of such an organization’s capital structure. The argument by Modigliani and Miller had the essence, adding on the value of debt tends to lower the value of any outstanding capital (equity). Firm’s gain realized by utilizing more of the so seemed cheaper debt will be offset through the implementation of a higher costing policy of the adopted riskier equity. Therefore, considering a fixed value of total equity, the capital allocation between equity and debt will thus be irrelevant since the two capital costs’ weighted average will be of the same amount regardless of any possible combination of the two capital costs2. Unfortunately, no corporation operates in a perfect business world; few if any, are debt financed 100%. Since the realizatio n of the winning paper by Modigliani and Miller, a number of potential explanations regarding the applicability of certain financial structures have emerged, revolving around a number of elements such as the role of taxes, the default cost, credit rationing, equity dilution, and agency costs, while including goals by sponsors and management, yet such goals tend to differ from each other. Another suggestion by Modigliani and Miller is that organizations maintain a capacity of a borrowing reserve in order to accommodate instances of economic uncertainty. It is, therefore, essential to investigate each of the potential inefficiencies mentioned in the prior discussion. Regarding the impact of Taxes, Modigliani and Miller present assumptions which portray obvious violations on the deductibility of payments of interest, and tax as well as corporate taxes. Often, payments on interest committed to debtholders are part of the deductions exercised from corporate revenues before the taxation o f such revenues. Consequently, the retained corporate tax plays the role of a subsidy upon interest payments. On the other hand, if the income paid out is in the form of a dividend to stockholders, such an income will undergo double taxation. The initial taxation happens at the level of corporate through corporate taxes, while the subsequent taxation will be exerted on income tax upon holders of equity. Therefore, a corporation striving to reduce taxes while intending to maximize the incomes available to respective investors should, therefore, supports itself financially, entirely through debt3. Default Costs refer to costs associated with distresses of finances, and, more certainly, bankruptcy. Default costs help in keeping the firm from giving large amounts of debt in comparison to the firm’s amount of underlying financing equity. There are two forms of default costs; can either be implicit or explicit. Explicit default costs cover the payments committed to accountants, law yers, as well as other professionals who advise the firm in instances of liquidation and bankruptcy, or while filling protection forms. Explicit costs can portray an essential fraction of total assets of the corporation. Such fractions are committed to investors during bankruptcy. Additionally, it is essential for corporations to take into consideration, the indirect costs associated with the financial distress incurred when a firm approaches bankruptcy or even

Social Media for Small to Medium Enterprises Essay - 1

Social Media for Small to Medium Enterprises - Essay Example It (Anoto) is a Swedish-based technology company engaged in providing digital writing solutions, through its 103 employees based at operations in Sweden, the US, Japan and the UK (Group 2013). Small medium enterprise companies are increasingly adopting social media strategy as means of increasing their market share and sales volume. This is because social media strategy has different advantages to the enterprises (Bronner, & de Hoog 2014). This strategy also has some disadvantages. This paper will look thoroughly into that and make appropriate recommendations. For this strategy to work, the organisation has to consider various steps. Firstly, the organisation should come up with a group of well renowned professionals in information technology, or related fields (AAron 2014). These professionals should have ample knowledge on computers and how to establish network architecture, which is effective. Secondly, the organisation should listen out to the consumers and learn which social media will reach a broad clientele. They should also compare notes with other organisations. That is what other organisations mostly the well established ones and the impact (Naylor et al. 2012). Thirdly, the organisation should know why they want to establish the social media strategy. Could it be that they need to reach out to their clientele for feedback or are they just marketing their products? The reason behind this should enable them establish themselves in the right social media. Fourth step is to establish the success of the strategy they are about to ad opt. They should carry a substantial research on the social strategy before adopting it to see how successful it is. The fifth step is to analyze the targeted audience. Will they be in a position to access the social media? Are they literate enough to know how to use computers or to know how to read? The answers to these questions are very crucial in determining that the media used is accessed by a great percentage of the

Politeness in Discourse Analysis Essay Example | Topics and Well Written Essays - 3000 words

Politeness in Discourse Analysis - Essay Example    Due to its expansive scope, politeness has been a subject of interest to academics in various disciplines, including linguistics, cognitive psychology, social psychology, philosophy, communication, and others (Chimombo & Roseberry 1998). A potent instrument for attaining control over an interpreter is politeness. The concept of politeness obviously fulfills a major function in the level of cooperation among participants in the dialogue. Politeness is cultural in nature (Martin 1993). As argued by Goffman (1956), what makes politeness crucial is the reality that discourses commonly give the interpreter a ‘face threatening act’. Negative responses, such as refusals, are one instance of such an act. If people ask courteously for something and are brusquely turned down, then they may feel humiliated or offended. People of several cultures view such straightforward conduct as a threat to one’s face, implying the personal image that the individual shows in a dialogue. If one individual insults another by performing a face-threatening act, the reply, in contemporary colloquial or informal English, could be â€Å"Get outta my face!† (Holtgraves 2002: 39). The extent of frankness that an individual could tolerate without sensing that a face-threatening act has been performed seems to rely greatly on culture.  Ã‚  Efforts that have been made to furnish an explanation of politeness that is wide-ranging enough to be relevant across cultural frontiers have been fairly broadly criticised (Fraser 1990).  

Harriet Tubman - Sentence Outline Term Paper Example | Topics and Well Written Essays - 1000 words

Harriet Tubman - Sentence Outline - Term Paper Example During winter, they were forced to bury their feet under scorching ashes to avoid frostbite. A. At the age of 5 years, the fragile girl child was already working in the fields. Life with her parents was not a walk in the park either. Their parents toiled day and night in the plantations. However, they made sure that they stuck together as a couple by negotiating with their owners and putting in extra hours. B. Their mother served them cornmeal in a large container in the evening and only the kids who could gobble food fast got a fair share of the meal. Sometimes they had fish or meat on their tables but only if their father was able to hunt. Their masters gave them food that was meant to last for a month and clothes were supplied yearly. C. Two years later, Harriet was whisked away by her master to care for their child. It was a gruesome experience in which she was loaded onto a wagon after a through and critical selection by their master. Life in the big house was scary and full of heart ache. She was subjected to heavy workloads for very long periods of time with the lady of the house screaming nasty comments to her that demoralized her and made her yearn for her former life with her family. She even developed sickness that enabled her to seek refuge with her mother but only for a short time before she was back again to her tormentor. A. Thoughts of freedom started to invade her young mind especially after recalling all the stories of freedom that she heard from Old Rit, her mother, making her envision of a world free of slavery. Her favorite was that of Moses before the Pharaoh demanding the release of the Israelites. ‘Let my people go’ was a statement that lingered in her mind for so long that it become an obsession. B. At the age of 12, she was to witness a runway slave who was thoroughly punished. However, that did not deter her spirit. She even made a futile attempt to escape when life became a thorn in the flesh, but she did

Death Investigations Assignment Example | Topics and Well Written Essays - 1250 words

Death Investigations - Assignment Example Mechanisms of death, on the other hand, are the preceding situations after the cause of death, for instance, is a person was shot on the head and the gunshot caused brain hemorrhage which leads the deceased to succumb to the injuries then blood hemorrhage is a mechanism of death. Mechanisms of death are not first degree factors that lead to death there must have been an initial incident which is a cause of death that will lead to mechanisms of death which will eventually transpire to the death of a person. Natural death is simply death, which is occasioned by natural causes such as terminal illness, ageing or situations like heart failure. This category of death is where the body of a human being ceases to function in its own without any external factor contributing to the same. It is commonly associated with the lifespan of an ideal human being when the body organs have performed their duties to their best capacity, and they would not function anymore. Homicide is where a person decided to take the life of another person purposely because of inherent reasons. This can be staged in a number of ways but the main point with homicide it is clearly planned and executed by those involved to kill innocent people in cold blood either by attacking him/her or using any physical or scientific means to execute the murder. Homicide may result from a person being poisoned by others or killed by police who were trailing maybe suspected gangsters, etc.. Suicide is a self-inflicted death that is purposely done by a person who wants to inflict self-harm or ultimately kill him/her through hanging, gunshot or even drug overdose.  

International Marketing - Project 2 Term Paper Example | Topics and Well Written Essays - 2500 words

International Marketing - Project 2 - Term Paper Example Abaya the name, originated from the Arabian Peninsula meaning, cover the whole body (Tarrant &Marjorie 301). Abaya does not produce casual wear it is strictly religious and traditional in its productions and has stores in Pakistan, Turkey, Arabia and many other countries worldwide(Tarrant &Marjorie 311). China revolves around its tradition, culture, and beliefs on a daily basis. Religious and traditional clothing in china is an important part of their lives since it gives individuals personal identity. Abayas will definitely succeed in producing these different types of religious clothing to China since it is a daily part of their lives. However, two factors require careful analysis in order to enter the market and launch the product with a successful accomplishment. These two key factors are targeting market, positioning in market and the marketing mix of the company. This report will expand on the factors that will determine the success in launching and penetration to the market. Traditional and religious clothing will target a wide range of individuals in china. There are several traditional clothing in China does not vary with age group, all the individual practice their religion and traditions and are committed to them including children and old people. There are several ethnic groups with different preferences in their traditional and religious clothing. The hun, Manchu, zhuang and hui are among the largest ethnic communities in China. The best way to target all of these ethnic groups is to subdivide the whole into segments. This will make it possible to treat each market uniquely with its own needs and marketing mix (Madura 89). During the division of the market into segments, it is necessary to note characteristics of each segment in order to realize the potential segments. In the case of China, these different ethnic groups can create the segments. Select the potential segments

The Truman Show Essay Example for Free

The Truman Show Essay Life’s remorseless nature presents uncontrollable situations to everyone at the most unexpected times. Like any game of cards, life deals a set of cards that a player is forced to play. This is known as agency; the concept that each human individual within a culture has the ability to determine and choose by free will his or her actions. Some prime examples that shine this principle is Viktor Frankl’s â€Å"Man’s Search for Meaning†, Albert Camus’, â€Å"The Guest†, Franz Kafka’s, â€Å"The Metamorphosis†, and Christof’s film, â€Å"The Truman show. † In each example, a third party advocate interferes and inhabits each protagonist into a controlled setting where the protagonists are confronted with a moral dilemma. In Frankl’s, â€Å"Man’s Search for Meaning†, the â€Å"dealer† inhabits Frankl in the concentration camp of Auschwitz. Unlike the other protagonists, Frankl possesses a psychological background and uses his knowledge to a great advantage. Frankl is able to analyze his brutal experiences in the camps to provide somewhat of a guide for those who are having trouble finding meaning in their lives even in the harshest environments. Like all the other protagonists Frankl is given a moral dilemma; whether he should dwell and suffer from electric fence syndrome or make something out of his experience and give inspiration to those who are in need. The central focus that Frankl was trying to reach to the readers was that no matter what type of suffering a person endures, as long as they hold onto their faith that everything happens for a reason, they can survive. By believing that everything happens for a reason, individuals are able to weather the storms of their lives with the strength and determination to overcome. For Frankl, he was able to weather his journey by living by his word and believing that he had a future after his captivity. Camus’ story, â€Å"The Guest†, is about choices. Daru, the schoolmaster, is an isolated man, who lives in a schoolhouse on a high plateau and he remains alone because his students no longer attend class. He lives in the schoolhouse away from civilization which shows that he is isolated geographically and emotionally. One day, Balducci the officer, arrives with a prisoner and he forces Daru to take responsibility for him. The prisoner must be brought to the police headquarters in Tinguit. Daru is surprised by the orders and tells Balducci that this task should not be done by a school teacher. He does not want to be involved with the political conflict, which is why the setting of the isolated schoolhouse is so symbolic. The setting of the story is important since it is during the Algerian war and Balducci tells the schoolteacher that he must follow the orders even if it is not his job, because during war times, everybody must participate. Daru is disgusted by the demands and tells him that he will not obey the orders given to him. By refusing to follow the orders, Daru is making choices that most people would not usually take. People tend to obey authority and do what they are told. In this story, Daru examines man’s moral responsibilities and believes it is wrong to turn the prisoner over to the authorities, yet he realizes that going against the orders might also cause him troubles. So, he avoids making a decision by leaving the prisoner the responsibility for choosing his own way; to turn himself in or to take the path of freedom. No matter what he chooses, there will always be difficulties and acting in good fate will never save you, like existentialists believe. In Franz Kafka’s short story, Metamorphosis, the idea of existentialism is brought out in a subtle, yet definite way. They do not believe in any sort of ultimate power and focus much of their attention on concepts such as dread and boredom. These bonds are not only evident in the work place, but at home too. Being constantly used and abused while in his human form, Gregor’s lifestyle becomes complicated once he becomes a giant insect and is deemed useless. Conflicts and confusion arise primarily between Gregor and his sister Grete, his parents, and his work. Each of these three relationships has different moral and ethical complications defining them. However, it is important for one to keep in mind that Gregor’s metamorphosis has placed him into a position of opposition, and that he has minimal control over the events to take place. Conflicts will also occur between family members as they struggle with the decision of what to do with Gregor. In the end they all come to the agreement that maintaining his uselessness is slowly draining them and they must get rid of him, as he slowly descends with his self-worth, the family begins to realize that Gregor’s worthlessness catalyzed them to make something out of their lives and work. In The Truman Show , there is irony present throughout the whole movie. During most of the film, Truman wanted to leave Seahaven and go explore the world. Once Truman learned that his life was a television show, he realized he would not be as unique if he left. He would not be the center of attention, and now wants to be just an ordinary person outside of Seahaven. Truman tried so desperately to live a conventional lifestyle, while his viewers wanted to be in their own utopian society. Although the show’s creator, Christof, tried to keep Truman in Seahaven, he ultimately could not. Truman’s freewill and control of his own fate led him to discovering the truth about Seahaven, and thus controlling the outcome of his life. He accepted the reality of his life being centered around a television show, but moved on by leaving Seahaven. Although Truman’s artificial world came to an end, he entered reality as he left Seahaven. When Truman was isolated and put inside a society that revolved around him, Christof seemed to have given Truman only shadows of his own perception upon reality. When Truman turns to see what casts the shadows, he is then told that what they have formerly seen has no substance, and that what they now see (the carried objects) constitutes a greater reality. When Truman sees the world outside the show he begins to question his previous beliefs. He has been cut off from the real world and was only shown one side. Truman was so naive and inexperienced that he can only believe everything Christof had described for him. It wasn’t until Truman saw what was happening that he could form his own opinion. This is where his moral dilemma comes in to play; does Truman stay in the utopian society and continue to live obliviously or does he fend for himself and live in the real world where he can perceive things in his own way?

Behavioural Finance Theory Dissertation

Behavioural Finance Theory Dissertation A survey of behavioral finance 1. Introduction: The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the Capital Asset Pricing Model, the Arbitrage Pricing Theory, the Cox Ingersoll-Ross theory of the term structure of interest rates, and the Black-Scholes/Merton option pricing model, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it overreacts one day and behaves very normally the other day. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that The traditional theory has overestimated the rationality of investors , their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about the markets and factors that influence the markets. â€Å"The paradigm is shifting. People are continuing to walk across th e border from the traditional to the behavioral camp†. (Gervais, 2001, P.2). On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. Giving very less account to the behaviorist explanations of trends and the irregularities †anomaly† (any occurrence or object that is strange, unusual, or unique) Also argued that in order to locate the patterns the data mining techniques are much helpful.. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally overreaction and under reaction are the major causes of the market behavior. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both in the psychology or finance fields and therefore as a result the models presented is being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior impacting asset prices and explaining that the field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. Hirshleifer points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If the money managers are incorrectly rational, that means that they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary the underlying assumption that the investors and the managers are completely rational makes insightful sense to many people. 2. Traditional Finance Empirical Evidence: Traditional theory assumes that agents are rational the law of one price holds that is a perfect scenario. Where the law of One price states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as Arbitrageurs. And the agents rationality explains the behavior of investor Professional Individual which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns wh ere as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category `instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. (Crowell, 1994, p. 1) Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsig ht (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy, Self-serving bias and lastly Money illusion. Framing is basically the problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing Mental accounting Anchoring are the common forms of Framing 3. Market in efficiencies: As we found out that observed market outcomes are totally opposite to the rational expectations and the efficient market hypothesis. Mis pricing, irrational decision making and return anomalies are the examples of it. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. Al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior. 4. Investing and cognitive bias: Money Managers and Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money manag ers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks. Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less th an optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rank companies in the similar industry ba sed on eight factors. Quality of Management, Quality of products services, Innovativeness, Long term Investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise Use of Corporate assets. (Crowell, 1994). The assumptions that we made were that that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. (Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk; Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of t he stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret. (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 Tony Blair stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment. In 2005 president bush also portfolio announced one such plan for personal account life cycle fund which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily that same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theor etical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. 5. Agents Rationality: Global culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people basically appears as a logical outcome of a belief system of a nation group of people. The Cultural factors were one of the major influences on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebelliou Behavioural Finance Theory Dissertation Behavioural Finance Theory Dissertation A survey of behavioral finance 1. Introduction: The Modern investment theory and its application is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the Capital Asset Pricing Model, the Arbitrage Pricing Theory, the Cox Ingersoll-Ross theory of the term structure of interest rates, and the Black-Scholes/Merton option pricing model, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it overreacts one day and behaves very normally the other day. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that The traditional theory has overestimated the rationality of investors , their biases in decisions casting a cumulative impact on asset prices. To many researchers the study of behavior in finance appeared to be a revolution. As it transforms peoples mentality and perception about the markets and factors that influence the markets. â€Å"The paradigm is shifting. People are continuing to walk across th e border from the traditional to the behavioral camp†. (Gervais, 2001, P.2). On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. Giving very less account to the behaviorist explanations of trends and the irregularities †anomaly† (any occurrence or object that is strange, unusual, or unique) Also argued that in order to locate the patterns the data mining techniques are much helpful.. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally overreaction and under reaction are the major causes of the market behavior. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are either primary factor of economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both in the psychology or finance fields and therefore as a result the models presented is being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior impacting asset prices and explaining that the field of behavioral finance is currently in its developmental stage, in its way of development it is facing a lot of disagreement which itself is a productive one. Hirshleifer points out that if we apply the conceptual models of behavioral finance to the corporate finance, it can majorly pay off. If the money managers are incorrectly rational, that means that they are probably not evaluating their investment strategies correctly. They might take wrong decisions in their capital structure decisions. It has been found that quite a few people foresee behavioral finance displacing the age old Efficient Markets theory. On the contrary the underlying assumption that the investors and the managers are completely rational makes insightful sense to many people. 2. Traditional Finance Empirical Evidence: Traditional theory assumes that agents are rational the law of one price holds that is a perfect scenario. Where the law of One price states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as Arbitrageurs. And the agents rationality explains the behavior of investor Professional Individual which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of noise traders (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns wh ere as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naive diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviors. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be `rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. Investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category `instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as `What is the cost of capital for this firm? or `What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of `testability and `predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. A persons tendency to make errors is known as cognitive bias. These errors are based on the cognitive factors that include statistical judgments, social attribution and memory being common to all the humans in the world. (Crowell, 1994, p. 1) Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups: People forecasting positively and people forecasting negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the illusion of validity which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsig ht (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. The three most common themes of behavioral finance are as follows: Heuristics, Framing Market Inefficiencies. People when decide on the basis of the rules of thumb regardless of rationalizing suffer from Heuristics. Some forms of Heuristics are: Prospect theory, Loss Aversion, Status quo Bias, Gamblers Fallacy, Self-serving bias and lastly Money illusion. Framing is basically the problem of decision making where the decision is based on the point where there is difference in how the case is presented to the decision maker. Cognitive framing Mental accounting Anchoring are the common forms of Framing 3. Market in efficiencies: As we found out that observed market outcomes are totally opposite to the rational expectations and the efficient market hypothesis. Mis pricing, irrational decision making and return anomalies are the examples of it. These terms have been described as specific market anomaly from a behavioral point of view. Anomaly (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Equity premium puzzle Behavioral Economic Models are restricted to a certain observed market anomaly and it adjusts the neo classical models by explaining the phenomenon of Heuristics and framing to the decision makers. It is usually said that economics get along with in the neo classical framework, with just one restriction of the assumption of rationality. Loix et. Al in their paper Orientation towards Finances explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. Al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior. 4. Investing and cognitive bias: Money Managers and Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money manag ers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem. The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks. Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less th an optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rank companies in the similar industry ba sed on eight factors. Quality of Management, Quality of products services, Innovativeness, Long term Investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise Use of Corporate assets. (Crowell, 1994). The assumptions that we made were that that Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns. (Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk; Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of t he stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: We have a double cognitive error: good company always makes good stock (representativeness), and involves less responsibility(Less aversion to regret. (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 Tony Blair stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment. In 2005 president bush also portfolio announced one such plan for personal account life cycle fund which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily that same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theor etical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. 5. Agents Rationality: Global culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people basically appears as a logical outcome of a belief system of a nation group of people. The Cultural factors were one of the major influences on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebelliou