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Unconsciousthought theory is unconscious mind is capable of performing tasksunaware. This is where complex decisions unconsciously without takinga lot of consideration in the event of the result. This ignores thecapacity principle that one cannot hold more ms in than seven itemsin mind. The unconscious mind does not have this challenge, and it isthrough this that makes it easier to execute. Logic reasoning followsa systematic approach compared to the unconscious that mostly followsa particular experience that had an impact on one’s life (Payne,2009).
Investorshaving gone through a particular experience of certain invest whethergood or bad can decide to invest in something just because they had agood experience using it.Some people perceive unconscious thought tolead to poor choices that are not true. This, for example, works whenone has understood some product to be more superior to another(Smith, 2011). They will tend to invest in it and will hope that itis a good decision. Investors have a tendency of believing that thecapital market is always independent and cannot go wrong on any ofthe investment that are listed. Forgetting the fact the role of thecapital market is more of check whether the investment adheres tolaws and not really about the pricing of their investments. Anotherreason is that the investors always ignore the cost of inflation andhow it works against them when investing for the long run rather thanshort run (Timon, 2013)
Also,to this capital market theory understands that investors are drivenby the human emotions that internally affect them. Most investorschoose one thing over another just because of their experience.
Payne, J. Y. (2009). Boundary Conditions on Unconscious Thought on Complex Decision Process. Investment , 56.
Smith, R. (2011). Unconscious Decision. Human psychology , 67.
Timon,C. (2013). Ethics and Business. TheWorld of Sport, 78.