INCLUDING BEHAVIOURAL ELEMENTS IN ASSET ALLOCATION PROCESS

Human mind ability in understanding, processing and using large amount of information is unfortunately limited. Confronted each day with hundreds of decisions, affective, emotional social and cultural factors often play a more important role that the rational ones, in contradiction with the assumption of classical finances centred on Efficient Market Hypothesis. As Platon once said the human mind could be easily compared with a chariot pulled on the one side by one pony - the ration and on the other by one elephant - the emotions. The aim of this paper is to combine the classical financial analyses and the behavioural elements in an allocation model which could be use by the financial consultant in the relation with their private clients. The proposed study take into consideration both cognitive and emotional biases, their differential presence in the case of man and women and their influence on the investors' decision. A survey on 888 participants was used in order to be able to formulate the final conclusions.