Chapter 2: Behavior Flashcards
Basic Developmental
Believes that human development occurs in stages over time.
Basic Humanistic
people are good
Basic Cognitive
behavior by reinforcement
Societal groups use a system of signs in their communication process.
A sign could be a word, object, gesture, tone, quality image, substance, or other references to a shared meaning for communication purposes.
Nonverbal cues
body position and body movement are important while voice tone and voice pitch are also telling
Active Listening
Requires the listener’s undivided attention. Observe speaker’s body language
Reflective Listening
Occurs when the receiver devotes attention to both the content being said and the feelings expressed.
Passive Listening
invoked when communication rests entirely on another person and the person receiving the information sits back and listens.
Motivational Interviewing
Focuses on overcoming ambivalence to change by guiding the client to (1) express their motivation for change, (2) discover their ability to change, and (3) commit to making the change.
Partnership MI
MI is a collaborative partnership
Evocation MI
MI draws out the client’s priorities, values, and wisdom to explore reasons for change and support success.
Acceptance MI
The MI practitioner is nonjudgmental, seeks to understand the client’s perspectives and experiences, expresses empathy, highlights strengths, and respects a client’s right to make informed choices about changing or not changing
Compassion MI
The MI practitioner actively promotes and prioritizes clients’ welfare and wellbeing in a selfless manner
Open Question
One that will result in a person answering with a lengthy reponse
Closed Question
Seeks a response that is very specific and commonly involves an answer that can be accomplished with a single word or two.
Collecting Client Data
The planner must seek to understand the beliefs, attitudes, and desires of the client.
Mirroring
Occurs when the planner synchronizes his or her verbal and nonverbal behavior, including body language, gestures, breathing, and language and voice quality, with those of the client. Shows agreement and affirmation.
Joining
Making a connection with the client and establishing a trusting relationship
Unconditional positive regard
showing respect, acceptance, and understanding the client’s wishes.
Integrity
Having strong morals and ethics
Traditional Finance has four basic premises
- Investors are rational
- Markets are efficient
- Mean-Variance Portfolio Theory governs
- Returns are determined by risk
Mean-Variance Portfolio Theory
A technique that investors use to make decisions about financial investments, based on the amount of risk that they are willing to accept
Behavioral Finance
- Investors are normal
- Markets are not efficient
- The behavioral portfolio theory governs
- Risk alone does not determine returns
What makes investors normal instead of rational?
Cognitive biases, errors, and being human
Behavioral Portfolio Theory
The theory is that there are certain behavioral biases that lead investors to make decisions, which in turn leads to lower returns.
Anchoring
Attaching, or anchoring, one’s thoughts to a reference point even though there may be no logical relevance or is not relevant to the issue in question.
Confirmation Bias
People tend to filter information and focus on information supporting their opinions
Affect Heuristic
A heuristic is a tool used in the minds of people, also known as a “rule of thumb”
Availability Heuristic
When a decision-maker relies upon the knowledge that is readily available in his or her memory, the cognitive heuristic known as “availability” is invoked
Similarity Heuristic
The mind of the individual goes back to a previous situation even if it’s not the same.
Confirmation Bias
People tend to filter information and focus on information supporting their opinions.
Herding
A person’s desire to conform or be accepted by a certain group.
Gambler’s Fallacy
In the realm of probabilities, misconceptions can lead to faulty predictions as to occurrences of events
Recency Bias
Occurs when too much weight is given to recent observations or stimuli versus long-term historical trends
Hindsight Bias
3 theories used in traditional finance
- Mean-Variance Theory
- Modern Portfolio Theory
- The Capital Asset Pricing Model
question 18
question 20
Prospect Theory
Provides that people value gains and losses differently and will base their decisions on perceived gains rather than perceived losses.
The Disposition Effect
The disposition effect is an anomaly discovered in behavioral finance. It relates to the tendency of investors to sell assets that have increased in value while keeping assets that have dropped in value.
Stages of Change
- Pre-Contemplation
- Contemplation
- Preparation
- Action
- Maintenance
Stages Pre-Contemplation
no intent to change
Stages Contemplation
Aware that change is needed and considering making change, but not yet ready to take action
Stages Preparation
Gathering information in preparation to make a change
Stages Action
Action is taken to implement the plan
Stages Maintenance
Prevention of relapse
Money Belief
Four broad categories of money scripts
- Money avoidance
- Money worship
- Money status
- Money vigilance
Money avoidance
Try not to think about money. Believe they do not deserve money
Money Worship
Buy things in an effort to create happiness
Money Status
Need to keep up the appearance of being successful
Money Vigilance
Are alert and watchful in matters concerning their finances
Compulsive Buying Disorder
Characterized by excessive preoccupation with shopping and spending that leads to distress.
Hoarding
accumulating and being unable to discard possessions that most people would consider worthless.
Gambling Disorder
Mental health disorder in which gambling leads to significant impairment and stress
Workaholism
A compulsive disorder that is often associated with anxiety or depression.
Financial Enabling
Reliance on unearned income from another person. Fear of being cut off.
Sources of money conflict
- Financial Infidelity -knowledge by spouse or partner
- Saving
- Spending
- Priorities
- Requests for assistance
- financial enmeshment -when parents involve children in financial decisions
Intrinsic Motivation
comes from within and is often associated with satisfaction and enjoyment
Extrinsic motivation
comes from an outside reward, you expect to get something in return
There are three main psychological needs that determine motivation:
Competence + Relatedness + Autonomy = intrinsic motivation
Cognitive Evaluation Theory
A sub-theory of SDT which asserts that social-contextual events such as feedback, communication, and rewards, that are conducive to feelings of competence can enhance intrinsic motivation.
