An Analytic Network Process to Support Financial Decision-Making in the Context of Behavioural Finance
Roberta Martino () and
Viviana Ventre
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Roberta Martino: Department of Mathematics and Physics, University of Campania Luigi Vanvitelli, Viale A. Lincoln, 5, 81100 Caserta, Italy
Viviana Ventre: Department of Mathematics and Physics, University of Campania Luigi Vanvitelli, Viale A. Lincoln, 5, 81100 Caserta, Italy
Mathematics, 2023, vol. 11, issue 18, 1-30
Abstract:
Following the financial crisis of the last decade and the increasing complexity of financial products, the European Union has introduced investor protection tools that require professionals to carry out a client profiling process. The aim is to offer products that are in line with the characteristics of the individual. The classes of variables for comprehensive profiling are obtained by matching the elements proposed by the Markets in Financial Instruments Directive and studies of classical finance. However, behavioural finance studies, which emphasise the importance of behavioural attitudes, are not clearly considered in this structured profiling. The present paper discusses the implementation of an analytic network process to support financial decision-making in a behavioural context, combining regulatory guidance and qualitative and quantitative evidence from the literature. The Kersey Temperament Model is used as the behavioural model to construct the network cluster that incorporates personality into the valuation. Uncertainty management is incorporated through recent studies in the context of intertemporal choice theory. The functionality of the network is verified through a case study, where two alternatives with different characteristics are considered to meet the same investment objective. The present approach proves how the generated structure can provide strong support for financial decision-making.
Keywords: analytic network process; behavioural finance; decision-making; intertemporal choice; MiFID II; temperament theory (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jmathe:v:11:y:2023:i:18:p:3994-:d:1243840
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