A Critical Review on the Book “Behaviral Finance and Wealth Management”

Behaviral Finance and Wealth Mangement (2006), written by Michael Pompian and translated into Persian by Ahmad Badri, tries to show the deficiencies of classical finance in modeling investment behaviors based on the rational economic models. Using psychological approach, the most important characteristic of the book is its practical aspects, and it can be used as a handbook guideline for investment advisors which is the author’s expertise. Most of the book is about introducing twenty behavioral and cognitional bios as well as some tests and case studies to recognize them. Although the translation is acceptable, there are some punctuation errors, and choosing some unfamiliar terms affects the readers’ understanding. Emphasizing the operational dimensions, the author has neglected the systematic and coherent approach to the theoretical and financial dimensions of the behavior.Moreover, there are some complete misconceptions about conventional finance, such as misconceptions about the curve of indifference and the nature of work in economics, ignoring normative controversies about economic rationality, emphasizing positive and empirical methods, and neglecting ethics and moral conflicts.