How Workers Attitude and Job Satisfaction Affect Their Work.

Thesis Statements: Attitude and Job Satisfaction: A worker attitude towards work is directly linked to the job satisfaction; a worker who is satisfied with his job performs better and excels at what he does. It is therefore imperative for a company to understand the attitude of its workers and measure the job satisfaction of its employees, as job satisfaction is essential for productivity. Introduction Worker attitude and job satisfaction deals with how an organization behaves. It involves the management directing employees into improving organizational and personal effectiveness.It plays an enormous role in determining the attitudes of employees and their job satisfaction. When an employee is happy, it is usually because they are satisfied with their work. This also improves the quality of their work. Attitude and job satisfaction may not fall completely on the management but also on the employees. If employees enjoy their work, they will not need external motivation from management , but instead the satisfaction they attain from completing their work will motivate them (Robbins, 2004). Job satisfaction is an individual’s contentment with their work.Its effect on productivity is either positive or negative. The relationship between job satisfaction and job productivity is however not consistent. An individual may still obtain high job productivity without having the satisfaction in the work. This happens mostly when money is their motivation. Another motivator is improving in his or her work in order to receive a promotion. Other employees may increase their productivity due to the satisfaction they get from their work. A reason for job satisfaction may also come from an employee getting a good salary.It improves job satisfaction as long as an employee has knowledge of the fact that they get fair payment for their efforts at the end of the day. Job satisfaction has an effect on an individual’s satisfaction with life. If an employee does not get sa tisfaction in their work, they may seek for satisfaction in other work unrelated areas. This provides fulfillment and balance in their life. He or she may also be content with work as it relates with those work unrelated areas. Job dissatisfaction may also cause an employee to quit (Robbins, 2004). How Workers Attitude and Job Satisfaction Affect Their Work.An employee’s attitude towards authority may affect his or her relationship with management. Negative attitude towards authority will cause clashes in the work place. Psychology is another reason that affects an individual’s attitude. Another reason for a negative attitude towards authority is jealous for their position. This attitude affects job productivity in a negative way. If the workers attitude is a negative one so is their ability to produce positive results. Worker attitude and job satisfaction are two factors that affect a company’s productivity.There are different issues that affect worker attitude and job satisfaction either in a negative or positive way. These issues include the management, employee, sociology, communication, culture, and work environment. Management Role The management’s style of leading plays a huge role in worker attitude and job production. Empowerment is one factor that can motivate better productivity. If the management gives an employee opportunity to work according to their own standards, preferred that these standards measure up to those of the company, job productivity will increase.Human empowerment is satisfactory to every individual. Self-satisfaction leads to job satisfaction. We also have strategic planning by management. This is crucial when dealing with influencing job productivity. An example of a way to motivate employees is the management offering them opportunities for promotions and pay rise negotiations. This will encourage job productivity since employees will want to receive these rewards (Jackson, 2002). Organizational objec tives also affect how the management relates with the employees.If the organizational goal is to achieve a certain percentage of profit in a business year, then it will exert pressure on the employees to increase productivity. Positive influence is not the only way to ensure an increase in productivity. Some organizations offer contracts that clear states the amount of productivity needed from employees. This is in the case of sales and marketing where a sales representative needs to achieve a target on a certain deadline. This may mount pressure on the employees and in turn affect their job satisfaction. In some cases, the management is not as strict with the employees.The problem with this is that the employees might eventually relax on the job. An organization may also decide to add more working days depending on their goals. Complying with such a decision is hard and it may leave the employees bitter and resentful towards management. This attitude will affect job productivity, a s the employees will arrive to work with no motivation. Another factor in work attitude is time away from work. Apart from free time on the weekend, which is compulsory according to work ethics, employees need to take time off from work. This normally is the leave period (Jackson, 2002).Employee Role Some individuals choose professions that they like while others end up in their profession due to pressure. Pressure may come from the need to make money or a parent or guardian deciding on what their kids will do. When one chooses something they love doing or has an interest in, then they are content and happy about what they do. Love for a profession encourages a positive attitude. This is all the motivation employees need when it comes to productivity. A happy employee is a productive employee. When an employee loves what they are doing, they attain job satisfaction.This automatically affects productivity in a positive way. Productivity however suffers with negative employees who onl y work to make money. Their aim is to increase their productivity in order to get more money but this eventually makes them stressful and bitter. Since they have no interest in the work, satisfaction is hard for them to achieve. This is another form of motivation but is not sufficient. The two major ways for employees to improve, productivity in their professional areas is the choice of profession. Employees need ways to relieve their stress if they want to improve their work attitude and productivity.Work related stress is common among most employees. This is especially by employees that do not experience any job satisfaction from their work. Stress is something that may lead to more serious illnesses. This lowers productivity from the absence of employees in the work place. Stress is relieved by taking breaks from work, exercising, socializing with friends, and having fun. Psychological development is also another factor that affects attitude. Since psychology is what determines h uman behavior, it affects how we react and relate with others.Every one of us reacts differently to different situations. An example is when management is brutally honest about an employees work, some may take it is a warning to do better others may take it as criticism and give up. This depends on how an individual makes decisions. External factors such as the family, relationships, financial status are a few of other things that also affect the employees’ attitude. A healthy employee is a productive employee and a happy one. Social Role Our social behavior affects our work. This is in regard to introverts and extroverts.An introvert will not easily socialize with people. This affects their performance in a situation that needs teamwork. Teamwork requires all individuals to communicate with each other. If employees cannot work well together, it affects productivity. A company that encourages teamwork experiences higher productivity. Extroverts are aggressive people and some people may try to avoid them. Relationships in the work place affects attitudes and in turn productivity. If employees have a close relationship with each other, employees work well together and their attitudes improve as well.An improvement in attitude improves job productivity and satisfaction. In order to improve this relationship, some organizations encourage team building by dedicating a few days for members to socialize. This is through encouraging games in this sessions or providing projects for them to do. Interaction between employees helps them know each other better and beyond the work place. It improves their relationship and attitude towards each other (Edwards, 2004). Social role also involves the relationship between employees and management. In most organizations, this relationship is usually strictly professional.The only time the two interact is while it involves work. This is a way for the management to ensure that they have an upper hand towards the employees. Th is may lead to employees withdrawing from the management due to fear. Fear affects productivity, as the employee cannot approach the management if he/she is having trouble. They may imagine that the management will see this as a weakness. A good relationship is one where the management associates with its employees openly. Respect is the only thing that needs establishment between the two. This way, it is easy for employees to approach the management.A good relationship will improve employee productivity by improving their attitude and encouraging job satisfaction. Another social factor is competition. This is due to human nature to prove themselves. Employees may compete amongst each other for appraisal or a chance to grab an available higher position. This is a way for productivity to improve. Their attitude will depend on whether the competition is a healthy or an unhealthy one. An unhealthy one will lead to stress (Edwards, 2004). Communication Communication is how information t ransmits between the management and employees or between the employees themselves.Employees need to be free with the management in order to approach them when they are having trouble. Good communication has a positive effect on the employee’s job satisfaction. When all their needs a met, they can easily perform their duties efficiently. This increases job productivity and in turn improves the workers attitude. Communication is also important between employees. Employees need to maintain a good relationship with each other in order to communicate efficiently. Respect is an important factor in communication. In every organization, respect needs to drive how they communicate.A good way to implement communication between management and employees is by planning meetings. These meetings should allow employees to ask questions and express their opinion. Management should ask employees for their input and suggestions in matters concerning them. This will make the employees feel even more part of the organization. It will improve the relationship of everyone in the organization. Good communication leads to a good relationship that in turn improves employee attitude and job productivity (Mitchell). Culture The differences in culture affects people’s attitude.Different cultures have different practice. Some cultures do not allow their employees to work for certain amounts of hours. This may affect an individual if a transfer occurs and they get to a work situation that encourages more working hours. He/she will develop a negative attitude towards work. In some cultures, individuals are risk takers. They enjoy doing things beyond their capabilities. They attain satisfaction both in life and in work. There is no better motivation to improve their job productivity than this. In others, employees are hardworking. Their attitude towards work is usually a positive one (Jackson, 2002).Work environment A positive work environment improves on employee attitude. This depends on other employees, the management and the available resources. If an organization takes care of their employees by providing all needed resources, then their productivity will improve. Job productivity increases a business performance and profits, which in turn ensures that employees receive their salary frequently. When the business performs well then the employees are happy. A good performance in the organization gives the employees a positive attitude that improves their individual performance.As long as the employees are happy and performing, job productivity will increase. Job satisfaction improves employee’s relationships with customers. A good working relationship such as that one will increase on the sales of goods and services. Some company’s offer their employees bonuses especially during the holidays. This acts as an encouragement to the workers and improves their relationship with management. In departments such as sales and marketing, employeeâ⠂¬â„¢s performance can improve if given bonuses or commission when they bring in more sales clients.With this knowledge, the employee’s performance is sure to improve drastically (Edwards, 2004). Conclusion The duty of management and the employee in improving workers attitude is debatable. Some may argue that it is up to the employee to ensure that they attain job satisfaction from their work, as they are the only ones in control of their attitude and performance. It is also possible to say that all the responsibility is entirely the managements. They decide on the nature of the environment in which the employee works.The management holds the power to control employee salary, off time and promotion. External factors such as the environment, social situations, and culture also affect worker attitude and job satisfaction. In my opinion, it is up to both the parties to decide on worker attitude and job satisfaction. If you need professional research paper help you can buy custom papers online at CustomWritings. com – online research paper writing service. Tags: Job Satisfaction research paperresearch paper on Worker AttitudeWorker attitude and job satisfaction essayWorker attitude and job satisfaction term paper

Dimensions of brand personality or characteristics Essay

As shown in the figure above, the dimensions of brand characteristics include sincerity, competence, excitement, ruggedness and sophistication of the products or services. In this regard, the dimensions can be sued for operationalising the dimensions of the characteristics of the brand structure. Different studies have shown that the characteristic of a specific brand reveals their best characteristic that outperforms their rival brands (Kapferer, 1997). The distinctive brand characteristic provides the brand the ability to be exploited as a channel for self-expression, self-appraisals and self-definition for clients (Karande, Zinkhan & Lum, 1997). In addition, brand characteristic is a context linked with the multidimensional image of a specific brand (Keller, 1993). These imply that the characteristic of the brand will lead to brand image. The brand personality dimensions can be sued evaluate or measure various brand images. It is noted that the brand personality dimension is a well researched context to determine whether the brands is strong and effective (Austin et al, 2003, Phau & Lau, 2000). The most direct and simplest manner which has been recommended in measuring the strength and effectiveness of the brand image is to solicit responses to different questions which pertains to a specific human traits (Keller, 2003). As mentioned above, one of the questions that should be answered in this paper is to determine the characteristics of a strong and effective brand. Different scholars have been able to establish some points to distinguish strong and effective brands. It can be said that a specific brand is strong and effective if such brand have the ability to influence the consumer purchase behaviour. According to Keller (1993), a brand is strong and effective if it has a significant impact on the purchase behaviour and decision making of the target market. In addition, strong brand is a brand which has the ability to retain on the memory and consciousness of the clients associated with their purchasing decision making. Based on the brand concept of a target market, Dobni (1990) regarded brand image as the subjective consciousness phenomenon. Dobni (1990) have realized that it is not easy to understand how brand can retain on the memory and consciousness of the consumer but brand which has a strong image is forming through the reason and perceptual connotation of the consumer. Furthermore, since the image of the brand does not physically exist in the products as well as in the entity, it is mentioned that a strong and effective brand has the ability to influenced and meld by its brand’s declaration of specialties of their content and by the individuals who accept the image throughout the purchase process. Hence, it is more essential consider the image of the brand than the consciousness appeared of fact to know whether the brand is strong and effective. In the explanation made by Aaker (1991), he mentioned that the brand is typically linked with the company in a meaningful manners and its strength and effectiveness is reflected to different attitude of characteristics include the performance of the product, compare price, the interests of the customers, the behaviour of the clients, famous person/s, personality and life style, their competitors, product category, and others. Each of these characteristics has a different degree of intensity to influence the strengths and effectiveness of the brand image. In addition, it can also be noted that strength and effectiveness of brand image of the products or services offered by the company can also bee attributed with the associated brand name to ensure that the clients will purchase the products or services. The characteristics of a strong and effective brand can be divided to flexibility of the materials, the tangible and intangible feelings of the consumer and others. A strong and effective brand is also considered as the one which has the ability to determine the products and services taken on their brands. It can be said that one of the characteristics of a strong and effective brand has the ability to appeal to its target market, and has the ability to become memorable among customers. Furthermore, a strong and effective brand also offers a unique image which separates it from other competing products or services. It can be noted that a company with a strong brand enables a specific service or product to distinguish itself from its rivals. From the study conducted in which 101 companies have been surveyed, the participants of the study revealed that having a strong and effective brand are indeed important to the success of the company and products, specifically new launches (Kohli & McBahn 1997). In addition, it is said that strong and effective brand has the ability to make statements to other audience. Having a strong and effective brand enables the company to have a short-hand communication of what the organisation is and what it offers. Strong and effective brand create social acceptance and instant mutual recognition among their clients. By having a strong and effective brand image, organisations can have the ability to relay to relay to the clients their intended market expression for the products or services they offer. Most likely, target market tends to buy strong and quality or effective branded products and as time go by, this branding change use-value with image value. Furthermore, it can be said that the key component of a strong brand is based on the initiation of an integrated approach in which industries are able to convey what they can offer relative to the competition, do what they are offering to the market and confirm it through consistent practice (Cai & Hobson, 2004). Accordingly, having a strong and effective brand and image to attain competitive advantage in the global market and to sustain its strengths and effectiveness, the management of the company must be able to give value to the capabilities of the brand (Nguyen and LeBlanc (2001). In an organisation, having a strong brand is attributed to having quality products or services. In this regard, the company must be able to provide a pleasant experience for target market to establish a strong and competitive brand image which may lead to their competitive advantage. It is said that the strength of the brand can be established once the company is able to consistently provide the target market quality products and services. In a study conducted by Kim, Kim, and An (2003), they have stressed that a strong and effective brand image has the ability to meet the specific needs of the consumer and achieved consumer-based brand equity. Strong and effective brand image has the ability to influence the development of customer base of each of the company as well as the consequent enhancement in brand’s financial performance. One of the significant characteristics of a strong brand has the ability to meet the viewpoint of the clients. Furthermore, a strong brand and effective brand has the ability to convey and update their information on the current trends in market demand and has the ability to formulate a strategy to sustain its strengths and effectiveness through customer satisfaction. Strong brand has the ability to provide total customer satisfaction which was developed within the company from knowing that most of the target markets are trying to find products which have been used by other people based on its name alone. Another characteristic of a strong and effective brand is its ability to reach the feelings that clients and other establishments have about the company with regards to the evaluation and assessment of other competing brands. In doing so, the management or the company handling the brands must be able to reach the clients through marketing activities like advertising and promotions. Having a strong and effective image means that the brand has the ability to maintain and sustain their competitive advantage. These brands has the ability to maintain such image in the marketplace since a negative change for a brand name may decrease in target market and consequently of revenue. It is said that it takes twice as hard to rebuild a good and effective brand image rather than initially building it.

Hamlet Philosophy Essay

Shakespeare’s play, Hamlet, is an Elizabethan tragedy. Hamlet, a young Prince of Denmark, suffers a dilemma between the unrelenting ambition of revenge and clashing moral standards. This is very much a play about revenge, but the reason that it continues to intrigue literary and theatrical audiences for almost 400 years, is because of the underlying philosophical meanings. Hamlet is more a philosophical play than it is a play about revenge. Throughout the play, Hamlet analyzes the uncertainty that death brings, questions the final arbiter in judgement and defies society’s belief in the great chain of being. Hamlet is surrounded by death. However, he is the only character that confronts death philosophically. Despite the revenge he is planning, Hamlet considers taking his own life. He strives to extract revenge upon Claudius, but the more guidance he seeks, the more lost and indecisive he becomes. Hamlet seriously questions if life is worth living from his life crisis. This is seen in Hamlet’s most famous soliloquy, that is said at the kingdom of Elsinore, before being spied upon by Claudius and Polonius. â€Å"To be, or not to be? That is the question: / Whether ’tis nobler in the mind to suffer / The slings and arrows of outrageous fortune, / Or to take arms against a sea of troubles, / And, by opposing, end them? To die, to sleep— / No more—and by a sleep to say we end / The heartache and the thousand natural shocks / That flesh is heir to—’tis a consummation/ Devoutly to be wished! To die, to sleep. / To sleep, perchance to dream—ay, there’s the rub, / For in that sleep of death what dreams may come / When we have shuffled off this mortal coil, / Must give us pause. There’s the respect / That makes calamity of so long life. / For who would bear the whips and scorns of time, / Th’ oppressor’s wrong, the proud man’s contumely, / The pangs of despised love, the law’s delay, / The insolence of office, and the spurns /That patient merit of th’ unworthy takes, / When he himself might his quietus make / With a bare bodkin? Who would fardels bear, / To grunt and sweat under a weary life, / But that the dread of something after death, / The undiscovered country from whose bourn / No traveler returns, puzzles the will / And makes us rather bear those ills we have / Than fly to others that we know not of? / Thus conscience does make cowards of us all, / And thus the native hue of resolution / Is sicklied o’er with the pale cast of thought, / And enterprises of great pith and moment / With this regard their currents turn awry, / And lose the name of action. â€Å"(3. 1. 57-89) In this soliloquy, Hamlet speculates if suicide is preferable; but it soon occurs to him that death is not a way out, because it is not possible to know what fate comes after death. Hamlet contemplates that the journey to death may lead to an eternal sleep, but it may not; the next life may in fact be worse that the life we are aware of. It is the uncertainty death brings that inhibits people from ending their lives. Furthermore, Hamlet also questions the final arbiter in judgement. This is seen when Hamlet discovers the treachery of Rosencrantz and Guildenstern’s visit, and reveals his depression . â€Å"Why, then, ’tis none to you: for there is nothing / either good or bad but thinking makes it so: to me it is a prison. â€Å"(2. 2. 249-251) Hamlet is referring to how there is no final arbiter in judgement, but that people with differing morals and ethics decide to believe in desired opinions that correspond to their beliefs. This observation that Hamlet makes can be compared to the philosophy of existentialism, which holds that â€Å"The starting point of philosophical thinking must be the experience of the individual. † (Existentialism) Hamlet is referring to how there is no definitive truth but only subjective truth, and society’s accepted values will favour one kind of truth, no matter how flawed it may be. Lastly, Hamlet’s fascination with death leads him to draw his own conclusions on the moral beliefs of society. Hamlet challenges the great chain of being; the religious hierarchal structure of all matter and life on earth. Upon his obsession with death, Hamlet asks Horatio for guidance on his perceived speculations at the cemetery about Alexander the Great. â€Å"No, faith, not a jot. But to follow him thither with / modesty enough, and likelihood to lead it, as thus: / Alexander died, Alexander was buried, Alexander / returned into dust; the dust is earth; of earth we make / loam: and why of that loam, whereto he was converted, / might they not stop a beer barrel? / Imperious Caesar, dead and turn’d to clay, / Might stop a hole to keep the wind away: / Oh, that that earth which kept the world in awe, / Should patch a wall to expel the winter’s flaw! â€Å"(5. 1. 201-210) Hamlet realizes that death is the inevitable fate of everyman; that the fate of everyman is a journey into dust. Death eliminates the differences between all people, regardless of how distinguished or insignificant they may be. Hamlet concludes that the great chain of being is false and everything in it, ultimately crumbles into dust, just like the bones in the cemetery. Hamlet is more a play about philosophical ideas and speculations, than it is a play about vengeance. There have been an exorbitant amount of tragedies produced, but Hamlet remains the most produced and analyzed Shakespearean play of all time because of all of the philosophical meanings and interpretations. Hamlet philosophies over death, judgement and the great chain of being. The most prominent philosophical idea in Hamlet is the mysteriousness of death. Interestingly, in Hamlet’s soliloquy â€Å"To be, or not to be: That is the question†¦ † (3. 1.57-89), it is addressed as the question, not a question. This can be interpreted as the most important question a person may ever have to face in life. Indeed, Hamlet is Shakespeare’s philosopher. Perhaps Shakespeare was attempting to philosophically question society’s motives in life, similar to Maslow’s hierarchy of needs, a theory of successive human motivation. References â€Å"Existentialism. † n. d. Wikipedia. 06 December 2012. . Shakespeare, William. Hamlet. Toronto: Harcourt Canada Ltd. , n. d.

Mangament Accounting Assignment Example | Topics and Well Written Essays - 3000 words

Mangament Accounting - Assignment Example Service Dept Y cost apportioned 20% 30% 50% The first step is to assign an appropriate cost driver to the overheads so as to determine the appropriate departmental overhead rate, the following table summarises the appropriate cost drivers for the cost objects: Overheads cost driver 1. Rent and rates floor area occupied 2. Machine insurance machine value 3. Telephone charges labour hours 4. Depreciation machine value 5. Production supervisor's salaries labour hours 6. Heating and lighting labour hours From the above table it is evident that the rent and rates will be charged to each department with reference to floor area, machine insurance cost will be charged using the machine value in each department, telephone charges, supervisor salaries and heat and lighting will be charged with reference to labour hours. We now determine the overhead rate in each department: Rent and rates: We determine the rent and rate allocation rate for each department, this will be determined by dividing the rent and rate cost by the total area and multiplying this with the area occupied by each department: Rent and rates = 12,800 Floor area = 3,000 + 1,800 + 600 + 600 + 400 = 6400 Rent and rates allocation rate = 12,800/6400 = 2 Each department allocated rent and rate costs: We determine the rent and rate cost for each department by multiplying the rent and rate allocation rate by the floor area for each department: A B C X Y Floor area occupied(sq metres) 3000 1800 600 600 400 Rent and rates allocation rate 2 2 2 2 2 Rent and...For York furniture in the manufacture of job 123 and job 124 we apply the job order costing method, however we also note that there are three departments involved in the production of these products and therefore we have to determine the overhead rates in each department. We consider the five department namely department A, department B, department C, service department X and service department Y as cost centres whereby products are assigned costs by the departments they pass through The first step is to assign an appropriate cost driver to the overheads so as to determine the appropriate departmental overhead rate, the following table summarises the appropriate cost drivers for the cost objects: From the above table it is evident that the rent and rates will be charged to each department with reference to floor area, machine insurance cost will be charged using the machine value in each department, telephone charges, supervisor salaries and heat and lighting will be charged with reference to labour hours. We now determine the overhead rate in each department: We determine the rent and rate allocation rate for each department, this will be determined by dividing the rent and rate cost by the total area and multiplying this with the area occupied by each department: The machine and insurance cost will be allocated using the machine value in each department, for this

Management Information Systems Research Paper Example | Topics and Well Written Essays - 1000 words

Management Information Systems - Research Paper Example Policies and strategies are therefore put in place to ensure that such kind of illegal goods transfer is curbed by all means as well as minimizing such kind of attacks by the use of the proper management information system in place. This ensures that goods undergo thorough screening through all means possible and in such an instance, the expert system is employed where certain gadgets are used to screen specific containers. Special intelligent forces are also used who have adequate training on various illegal goods as well as on dangerous weapons. Executive information system is as well used to find prior information about cargo aircraft attack which then is used to make a proper decision on the routes to take or find a way of dealing with such kind of attacks so that they can be avoided by all means. It is the executive that makes a crucial decision upon the running of the aircraft; hence, it is important to involve a proper executive information system in order to fight such kinds of cargo attacks. ... When the weapons are allowed to cross to another country and sold illegally, they are sometimes used for robbing, extra-judicial killings, carrying out terrorist attacks among other evil things. This poses a threat to national security as the citizens will not feel safe in their own country. Sometime it is drugs that are airlifted to other countries where they are considered illegal by law and are not supposed to be used or sold. Some of such drugs are together with cocaine which has diverse effects to a person’s mental and psychological well being as they are very addictive and their cons outweigh their pros as far as good life is concerned. These drugs can ruin a country’s active population especially the youth hence rendering them useless in the society. Certain animal products like elephant tusks are also in high demand in most countries like South Korea and Asia for its ornamental value. On the contrary, elephant becoming a rare animal used to boost the tourism ind ustry in the countries where they exist like the Sub-Saharan African countries; there is a ban on the transportation of tusks in order to reduce poaching of this precious wildlife. From all the examples of the problems mentioned above, it is then very necessary to increase efficiency in the cargo aircraft by employing appropriate management information system strategies to carry out proper screening in order to catch up with the perpetrators and accomplishers of such illegal acts. It becomes very hard to find out which management information system should best be used to efficiently deal with this situation but expert system is so obvious that needs not to be left out of the operation. Appropriate Management Information System Expert system comes

Tata Group Global Business Assignment Example | Topics and Well Written Essays - 3250 words

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How drugs cause crime Essay Example | Topics and Well Written Essays - 2500 words - 1

How drugs cause crime - Essay Example Thesis There is no evidence suggesting that crime results from the direct effects of the drugs themselves, but drug addiction leads to deviant behavior, unemployment, lack of financial resources and poverty - the direct causes of crime. The most obvious and superficial way to define crime is to say that it is the violation of regulations of society. In advanced societies which have transcribed their rules of conduct into criminal law, crime is a violation of the code. The statement is intended to show that the rules of conduct in society define and make crime. Whether society is dealing with crime in an advanced society having a written criminal code or crime in an unadvanced society having unwritten mores, it is evident that criminal behavior is a violation of the rules of the social order. Every society, through the accumulation of its heritages and culture, possesses a body of social values that are conceived to be important to its welfare. The mores define the rules of conduct so as to protect and preserve these important values (Akers and Sellers 26). Repeated use of a psychoactive substance or substances, to the extent that the user (referred to as an addict) is periodically or chronically intoxicated, shows a compulsion to take the preferred substance (or substances), has great difficulty in voluntarily ceasing or modifying substance use, and exhibits determination to obtain psychoactive substances by almost any means† (). Taking into account the psychological theory, it is possible to say that the drug addict as a degenerate and vicious criminal much given to violent crimes and sex orgies. More and more people are coming to understand the nature of opiate drugs and the meaning of addiction. Such pain-killers are the drugs of choice of most persons who are fully addicted in the sense described below (Akers and Sellers 34). This is an important point, because the continued use of these opiate-type

Lucy vs. Zehmer Essay Example | Topics and Well Written Essays - 1250 words

Lucy vs. Zehmer - Essay Example The instrument the Lucys were seeking to enforce stated: â€Å"We hereby agree to sell to W.O. Lucy the Ferguson Farm complete for $50,000, title satisfactory to buyer.† It was written by A.H. Zehmer, and was duly signed by both A.H. and I.S. Zehmer. The defense of A.H. Zehmer was that he considered the offer of Lucy to purchase Ferguson as a joke, and at the time they signed the document both of the respondents were drunk. Zehmer also stated that while he did write the document, to him it was more of a response to a dare, as he did not believe that Lucy could afford $50,000, something he outrightly told the latter. In fact, although Zehmer wrote the contract, he did not deliver it, but Lucy picked it up, read it and put it in his pocket. At this point, Lucy offered $5 earnest money to seal the contract, but realizing he was serious, Zehmer refused to accept the money and instead told Lucy that had no intentions to sell Ferguson. On the other hand, Lucy contended that the sale was a done deal. He argued that at no time did he believe Zehmer to be joking. When Zehmer mentioned that Lucy would not be able to afford his price, Lucy assured him that he could. This was the reason Lucy immediately thereafter asked the help of his brother who agreed to share interests in the purchase. The lower court decided that Lucy had not proven his right to specific performance, and the case was dismissed. ... However, if the contract remains valid, then the Lucys are entitled to its specific performance. 3. The court's decision on those issues The Supreme Court of Virginia ruled that a valid contract had been created when the Zehmers set their signatures to the instrument, creating an obligation on either side to meet its terms as contained in the document. The claim of Zehmer that he was merely drunk, and at the same time only joking (i.e., did not really intend to sell), is not sufficient to invalidate the existing contract. The complainants are entitled to the specific performance of the contested contract. The decision of the lower court is therefore reversed, and the case is remanded. 4. The rationale the court used in reaching those decisions The Supreme Court decided that Zehmer’s contention that he did not really intend to offer his property for sale does not hold water. It is true that normally, the law of contracts requires that the parties to the contract mutually consen ted to it. However, given certain cases such as this one, it is not so important for the parties to mentally agree to the forming of the contract; what is important is that the acts and words of one of the parties convey the reasonable meaning of such intention to the other party, that is, that the parties appeared serious in their intent to transact (Patterson, p. 74). A binding contract of sale therefore existed between the two parties, whether or not the response of the Zehmers was serious or in jest, because one party (Lucy) made a serious offer, and took their response to be likewise a serious answer to his offer. â€Å"Intentions of the parties to a contract are determined by a reasonable interpretation of their manifest conduct and expression. Unexpressed

The Batek of Malaysia Research Paper Example | Topics and Well Written Essays - 2000 words - 1

The Batek of Malaysia - Research Paper Example They live a nomadic lifestyle and therefore the exact location of their settlements change within the general confines of the area that they inhabit (Bonta, 1993). The Batek language belongs to the so-called Aslian sub-branch of the Mon-Khmer branch of the Austro-Asiatic language family (Lewis, 2009). Until about 1970, the Batek were widespread throughout the region of peninsular Malaysia. However, since then, heavy encroachment for the purposes of logging and farming has resulted in this community being confined to the Taman Negara National Park and the surrounding region (Lye, 2004). In spite of the encroachment and resulting interactions with the surrounding Malays, the Batek have managed to build and maintain a significantly different culture that strays away from the socio-structural norms of their neighbors. The Batek Lifestyle Traditionally, the Batek have lived by hunting and gathered from the forest. Their diet included fruits, leaves, shoots, fish and small game animals lik e monkeys. However, as a result of encroachment and increased interactions with surrounding Malays, they have started depending on commercial foods items like rice, sugar, tinned sardines, biscuits and tea. One of the social norms of the Batek society is to share the food which they have collected by hunting and gathering. ... When this happens, the Batek follow a more formal and ritualistic way of dividing the food. For example, if they have caught a monkey, first the members of the hunting party would eat the offal and the tail, because they cook the fastest. Then the cooked meat is divided into parts so that each family in the camp gets some. The portions are adjusted based on the size of the family (Endicott, 1988). The Batek do not believe in hoarding food but freely share it with camp members including those who have not been able to collect any food. However, there are some things that are considered personal property like a man’s blowgun, radios, tobaccos or a woman’s hair comb (Endicott, 1988). Still it is common for them to be lent or even borrowed without the owner’s knowledge. Since the 1960s, the Malaysian Government has encouraged the Batek to live in Pos Lebir and become non-nomadic farmers. However, most Batek are unwilling to settle in Pos Labir because it would mean l eaving their nomadic lifestyle and their culture. The Batek do not prefer farming since it involves a heavy investment of time and energy before the results may be enjoyed. However, they prefer to work as daily laborers revealing that they accept changes such that they can maintain the important elements of their culture. Reflecting on this situation, one Batek said, â€Å"We Batek are rich if we have a cooking pot, digging stick, bush-knife, lighter, tobacco, salt and fishing pole. Also a man is sad if he doesn’t have a blowpipe. We only want four or five sarongs, we don’t need trousers. If we live here (in Pos Lebir), we need money, if we have money we buy a lot. But if we have no money, no problem, we reject possessions. When we live in the forest, we don't need

The Guardian Building, Detroit, Michigan Research Paper

The Guardian Building, Detroit, Michigan - Research Paper Example Detroit is credited with the best paintings and the best painters like Graham Beal, Julie Mehretu and Jane Hammond. In Detroit, the Detroit Institute of Arts also has a wide collection of paintings which hail from all corners of the world consequently making Detroit an art attraction city. It is reported that Detroit owns more than 100 art galleries which showcase the talent and creativity of the people of Detroit (Uhr, 4). Painting being is one of the major aspects of art that has been vividly exploited by the people of Detroit. Due to this, this paper will explain the recent and old art of Detroit with a main focus on paintings around its metropolitan area. Paintings in Detroit The Detroit area hosts a wide range of paintings safely kept in galleries, museums, schools and famous buildings with some of the oldest and famous painters credited for the beautiful works. One of the oldest painters in Detroit was Diego Rivera who painted twenty seven wall paintings. His paintings featured the traditional Mexican culture which resembles the indigenous Indian culture (Scripps, 54). It is evident that art was used to express the heritage and culture of a people. Moreover, Diego Rivera’s work also included wall paintings or murals of the Ford Company at the start of making of the fuel propelled engine (Scripps, 147). He painted workers at the industry working with big machinery inside the Ford Company making the engines. This was a great monument which until today holds the memory of the beginning of the petrol engine designing. On the walls, Rivera painted murals with varied expressions from the cultural traditions of the Mexican people to the industrialism if the American nation (Scripps, 97). They were considered his greatest success which depicted the industrial and technological revolutions that were taking place around the nineteenth century. It is also evident that painting as art also stores the memories and events that were take place at a certain time I n addition, Thomas Cole in 1845 and 1847 painted one of the most extraordinary pieces of the view of lakes and peaks at sunset (Richardson, 57). This was a great painting which attracted attention from the greatest collectors in Detroit. It was finally stored in the Schwartz Galleries among other paintings done by Thomas Cole. In his paintings, Thomas Cole expressed nature at different views clearly exploring the diverse natural attractions of Detroit. This explains that art is also used in the expression of certain natural phenomena. This led to increased tourist visitations and further enhancing the art of the Detroit people (Downs, Rivera & Kahlo, 57). Other inspiring and talented painters have also hailed from Detroit. Particularly, Patricia Hill Burnett (Siler) a lady who was born in Brooklyn moved to Detroit with her mother and started professional portrait painting (Beal, 21). She is credited with some famous paintings including the painting of the Philippines President Coraz on Aquino in her presidential palace in Manila, the portraits of Margaret Thatcher, Max Fisher, Jackie Joyner Kersee and Indira Gandhi. Another artist who was very talented is Shelden Iden, who is credited with beautiful works of himself, and the inspiring paintings of the great Indian caves using the light rays that were streaming through the cave openings. Robert Wilbert, another painter based in

What function does the Joseph story cycle (Gen. 37-50) play within the Essay

What function does the Joseph story cycle (Gen. 37-50) play within the Book of Genesis - Essay Example 1-2) – and blessing Jacob’s whole family, purposely to initially, show the gradual fulfillment of God’s promise made to Abraham: Now the Lord had said unto Abram, Get thee out of thy country, and from thy kindred, and from thy father’s house, unto a land that I will shew thee: And I will make of thee a great nation, and I will bless thee, and make thy name great; and thou shalt be a blessing: with the number of Abraham’s descendants growing and their influence increasing in a foreign land (Mourna 2008, p. 5). The continuing story of the Patriarchs as God’s fulfilment of His promise is further emphasized as the Joseph Story ends (Redford 1970, p. 25), and as the Book of Exodus begins. And that ultimately, that promise will be fulfilled through a royal dynasty that will spring from the descendant of Judah (Alexander 1993, p. 255) as ensured by the unique genealogy outlined in the Book of Genesis beginning from Adam to Jacob and his sons (Alexander 1989, p. 5) (See illustration that follows.) In this sense, not only is the messianic prophesy established – that the Messiah will come from the royal family of Judah – Indeed Jesus Christ is born from the Davidic Kingdom ruled by King David, the grandson of Judah from his son Perez – (Gen. 49: 8-9): Judah, thou art he whom thy brethren shall praise; thy hand shall be in the neck of thine enemies; thy father’s children shall bow down before thee. Judah is a lion’s whelp; from the prey, my son, thou art gone up: he stooped down, he couched as a lion, and as an old lion: who shall rouse him up? but also is the eschatological message: â€Å"The scepter shall not depart from Judah, nor a lawgiver from between his feet, until Shiloh come: and unto him shall the gathering of the people be† (Gen. 49: 10) (emphasis added), wherein the ‘scepter’ could be easily understood to mean rulership (Gunkel 1997, p. 456) of a King,

Innocence and experience Essay Example for Free

Innocence and experience Essay When the theme of innocence and experience is being discussed you can distinguish the correlation between them, ho they both tie into one another. People view childhood as a time of innocence, growth, and freedom from the responsibilities of maturity, whereas adulthood is a time of experience. This coming of age is actually a time where we re-evaluate our identity as adolescences. It is the time in our lives where we continue to find our true selves and explore who we are by experiencing rough circumstances in life-even if it becomes a painful process-while being subjected to an awakening of a bigger picture of life outside our small world. In Araby by James Joyce, we can visualize the transition from fantasy to reality. The narrator thinks of an entire event in the form of an epic quest. He puts Mangan’s sister up on a pedestal and makes himself think he is a knight going after the princess. After hearing the conversation at the bazaar, the narrator reaches an epiphany but not a positive one. Instead of reaffirming his love for Mangan’s sister, he gives up. The boy has his epiphany, but we never find out what happens to his plans or ambitions after the epiphany. Araby focuses on the sudden transition from the illusions of childhood to the insight of maturity. He also leaves out the character’s names to show they haven’t developed a mature identity yet. The boy in Araby experiences the disillusionment in his ideas. At some point in our lives we experience something that begins to diminish what is left of our innocence. But this loss of innocence is what helps us move to a greater wisdom about ourselves and the world around us.

Rise And Fall Of Military Rule

Rise And Fall Of Military Rule Militarism was the dominant force in the politics of Latin America in recent history. The rise of military rule in twentieth century Latin America has, to a large extent, shaped the political life of the nations in the region and also produced literature on this form of authoritarianism known as bureaucratic authoritarianism. These authoritarian regimes were unparalleled in their brutality and suppression of civil society and political movements. The bureaucratic authoritarian regime was the predominant political trend in Latin America during the mid 1960s which began with the Brazilian coup of 1964, Argentina in 1966 and 1976, Chile and Uruguay in 1973. This essay begins with the military intervention from earlier years (1930) which will be distinguished from the succession of coups that began with Brazil in 1964, and then treats the factors that brings about military rule in the region, the rise and decline of military dictatorship in Latin America with focus on Brazil, Chile and Argentina. The kind of regimes the military puts up, the reasons behind their fall with particular emphasis and evidence on the fact that military rule is bad for development in the region and the possibility of a comeback of military dictatorship in the 21st century Latin America will also be highlighted. It is pertinent to distinguish the succession of coups that began with brazil in 1964 from earlier interventions between 1930 and 1964.The military frequently intervened in national politics after 1929 the Brazilian military acted as arbitrator in domestic conflicts in 1930, 1937 and 1945.The Argentine militaries overthrew the radicals in 1930, the conservatives in 1943, and Juan Domingo Peron in 1955 (Wynia, 1990).In later years, they interfered occasionally to subdue dictatorial presidents and help set up democratic governments as it happened in Venezuela in 1945 and 1958. Military rule was temporary during this period, Latin America armies engaged in breakthrough coups targeted at replacing one group of civilian leaders with another preferred with the use of their weapons. In contrast, the generals who took over after 1964 came to stay. There are several reasons as to why the military constantly intervenes in the politics of Latin America, professional military officers in the 1960s and 1970s blamed the poor conditions in Latin America on the corruption of civilian politicians and the institutions of liberal democracy, they concluded that economic development and political stability could only be achieved with the establishment of long term military rule. Economic crisis prompted military interventions in that they could result in popular unrest which could provoke disorder; the governments inability to control the situation is a basis for military coups. The military was also motivated to create a more orderly political process distinct from what they were used to in the past of which they themselves contributed to with all the periodic coups. They were determined to create a new political order which they did with the use of force. Military intervention in Latin America is also influenced by foreign governments who use local armies to defend and uphold their interest as at when due. Conspiracies involving foreign agents are covertly organised like the Chilean coup of 1973 of which Allende was overthrown and eventually killed and General Pinochet assumed president fully supported by US authorities (Livingstone, 2009). Revelations from the US senate investigations proved how foreign agents can trigger military interventions. The fact is that military intervention really made no difference in the economic development in the region nor did it bring to an end political unrest rather, resistance began to grow as many became affected, dissidents were either jailed or killed and many people began to disappear, so was the situation of things after the military took over the political life in Latin America. The military of Brazil in 1964 adopted the national security doctrine which states that the nations interest supersedes that of the individual, citizens are mandated to do everything possible to protect the nation. A succession of authoritarian regimes governed Brazil from 1964 to 1985. The military overthrew the Goulart government which was having difficulties controlling the state of the economy which had deteriorated rapidly in 1962 and 1963.The Brazilian generals created a regime in which they would govern the nation as leaders of the armed forces rather than hand power over to a single officer who would eventually become a one man dictator. However there was the need to elect one amongst them to serve as chief executive to enhance orderliness and also to prove to the public that someone was in charge. General Castello Branco was immediately elected as the new president by congress and served until 1967.during his regime, inflation was reduced but not as expected, his government was still unable to achieve economic stabilization. (Wynia, 1990) President Artur Costa e Silva was the next military president to rule from 1967-1969, his authoritarian government used dictatorial measures to achieve its idea of rapid economic development. General Ernesto Geisel assumed presidency in 1974 after Costa e Silva suffered a debilitating stroke in 1969 and years of guerrilla movements. Thereafter president Joao Figueiredo took over in 1979 and ruled until 1985.During this era of military rule in Brazil, political activists and dissidents were jailed as well as anyone who contended with the authoritarian rule. The military interdicted labour movements, political parties and student organisations, civilians had no say whatsoever. On the economic scene, the implementation of structural adjustment programs aimed at controlling inflation actually achieved a certain measure of success and rapid economic growth thereafter causing the military to brag of performing a miracle when in actual fact it was just a case of the military being in the right place at the right time. Wynia (1990) states that what propelled Brazil to speedy economic growth was mainly the combination of foreign and state investments supplemented by domestic private efforts in commerce and agriculture. the use of authoritarian rule to enforce harsh austerity only made the plights of the peasants worse, the miracle began to fade, inflation had risen to over a 100 percent, foreign debts mounted reaching $80 billion in 1982 also the world recession in 1981 and 1982 depressed the value of Brazilian exports (Skidmore and Smith, 2005). This period marked the beginning of the decline of military regime in Brazil. The Argentine military assumed power in June 1966 with the intention of a revolution after the removal of president Illia from office. Three successive army generals attempted to rehabilitate the country politically and economically. General Juan Carlos Ongania took over presidency and considered his regime irrevocable stating repeatedly that there would be no elections for a long time. Ongania made some economic progress by opening the mining industry to foreigners and slowing down price increases, however, his regime was more of the technocrat than the politician. He repressed the national labor movement and jailed its leaders, there was rising resentment throughout the country and in a bid to put an end to it, the military ousted Ongania from office and General Roberto Livingston was named president (Fernandez, 1973). General Livingstons leadership was not any better despite all his political promise of Argentina returning to democratic normalcy. By March 1971, Argentines became openly dissatisfied at the economic and political crisis, the military stepped in once again, removed Livingston and General Lanusse was named president. Lanusse intention was to achieve a new political order and opted for a relegalization of political parties, he took even a greater gamble by allowing Peron return to presidency. The military returned after the Peronista government of 1973 and fell apart with the death of Peron a year later, Isabel his wife and successor could neither hold the government together. General Jorge Rafael Videla took over in March 1976 and launched a vicious campaign dirty war against the opposition, guerrilla movements were on the rise seeking the overthrow of the government and the installation of a socialist regime along Marxist-Leninist lines. The junta embarked on an all out war against its opposition, there were the desaparecidos, those who disappeared and were never heard of (Skidmore and Smith, 2005).The dictatorship affected society in Argentina, people lived in fear and the economy suffered. Videla handed over presidency to General Roberto Viola in 1981; Viola was replaced by Army commander-in-chief general Leopoldo Galtieri who went to war over the Falkland/Malvinas Island with Britain. The British defeated and humiliated the Argentines and also blocked European trade with Argentina for three months to punish Galtieri economically, the Argentine economy went from bad to worse. In 1983, there was a transition from military to civilian government with radical party candidate Raul Alfonsin emerging as president. The new regime was committed to prosecute military officers involved in the killing or disappearance of more than 10,000 people. Nine military commanders-in-chief were charged for crimes committed and sentenced to prison.No other Latin America government had dared prosecute its officers for crimes committed during a military regime (Skidmore and Smith, 2005) The government of General Augusto Pinochet seized power on September 11, 1973 by overthrowing the elected government of socialist president Salvador Allende (Arturo, 1984). The Chilean coup of 1973 was justified by the new military government as necessary to restore order, avoid class warfare and salvage the economy, the government set out to impose on Chile a bureaucratic authoritarian regime. The first four years of the junta brought about terrible human rights abuses, thousands of civilians linked with the Popular Unity parties were murdered, tortured, jailed, brutalized or exiled. International organisations and the Roman Catholic Church condemned the widespread violations of human rights in Chile and as such, the church came into constant conflict with the junta. General Pinochet emerged dominant figure; his government was a one-man dictatorship with the rest of the junta under his command. He made himself commander in chief of the military and chief executive of the state, Pinochet alone commanded power. Caistor (2006) reveals Pinochets use of brutal force to impose order on the country in a reign of terror that killed more than 3,000 Chileans and thousands tortured or forced to live in exile abroad. The United States under the Carter administration criticised Pinochet for the 1976 assassination of Orlando Letelier, the former Chilean ambassador to the US under the Allende regime. On the economic front, Skidmore and Smith (2005) states that civilian technocrats known as the Chicago boys introduced significant changes in the economic policy. They reasoned that what restricted Chiles economic growth was the governments intervention in the economy which results to reduced competition, artificially increased wages that leads to inflation. The ec onomic boom proved to be short-lived, there was an economic crisis by the end of 1981, exports and foreign credit fell sharply, unemployment soared to 30 percent, real wages fell and GNP dropped 13 percent in the same year. (Edgardo, 1986) General Pinochet stepped down in March 1998 after seventeen years as a military dictator; he was arrested in London in October 1998 at the request of a Spanish magistrate to prosecute him for human rights violation of Spanish citizens. The periods of protracted military rule in Latin America failed to bring about enduring economic recovery or re-ordering the Civilian political system which were some of the reasons why the military claimed to have intervened in the politics of the region. They have proved unable to cope with crisis on the economic front, bereft of ideas once an initial policy has turned sour (Cammack, 1985). In essence, military rule can be argued to be bad for development as it does not produce durable solutions to political and economic issues. Its interest is more of selfish purpose is and always ready to shut down any opposition with the use of force, the people have no say whatsoever. The twenty first century augurs very well for Latin America societies with the decline of military rule. Finer (1976) provides an explanation as to why these military regimes fall from power. He states that the military suffers from two crippling political weaknesses: their technical inability to administer and their lack of legitimacy to rule. The failure of the armed forces to establish legitimacy affected their downfall, legitimacy is necessary because a government cannot adequately rule by using force alone. However, this does not mean that a regime cannot rule without legitimacy, but as Finer implied, the threat of physical compulsion is not an efficient, i.e. an economical, way of securing obedience. (Finer, 1976:16). Futhermore, rule by force alone will eventually be challenged by anyone strong enough to try, this explains the fact that military coups are often always followed by a succession of counter coups The decline of military rule in Latin America can also be associated to the fact that the generals were not properly prepared for the task, their education hardly offered any preparation for the reorganization of complex economic and social institutions. Military regime seems to follow a similar direction in the region, starting boldly with achieving economic stabilization which eventually declines as a result of economic crisis or social and political reconstruction. However, the military of Latin America may be out but definitely not down. It is rather utopian to say the military have abdicated from politics for good because recent coups though short-lived prove otherwise. On the 28th of June 2009, president Zelaya of Honduras was ousted in a military coup because the left- wing leader was seeking a change in the constitution to allow him stand for re-election; arrested in his pyjamas, he was sent into exile in Costa Rica. According to the Guardian (2009), Zelaya described his arrest as a coup and kidnapping. Similarly, short-lived coups in Ecuador and Venezuela shows that the military still has a hold of political affairs. The Ecuadorian coup of January 2000 saw President Jamil Mahud deposed by Ecuadors Indians with the support of military leaders. Also, in 2002 there was a brief seizure of power when Venezuelas Chavez was ousted by the military and detained at an army base. Interestingly, a recent edition of US magazine Newsweek, predicts that this year 2010 will see the fall of Venezuelas Chavez following a coup. In my opinion, the Chavez coup predictions is wishful thinking, the Obama administration will never duplicate what they did in Honduras. A civil war will break out if Chavez is ousted and a war against Venezuela implies a war against Ecuador, Cuba, Bolivia, Nicaragua and possibly Brazil and Argentina; knowing that if Venezuelas leader is taken out by the US, they will be next. Furthermore, in November 2009 Paraguayan president Fernando Lugo in an attempt to avoid being removed from office via a coup, fired his military chiefs and vowed that he would not be forced out of office before the end of his tenure in 2013. As aforementioned, there is no guarantee that the military will not leave their barracks once again and get involved in political affairs although it cannot be compared to the 20th century when military rule was dominant in Latin America. However, the military is acquiring new roles both nationally and internationally; many of the regions armed forces have become overwhelmingly internationalized providing humanitarian assistance, security and stability needed to ensure political, social and economic development (Ross, 2004) Conclusion The role of the military in 20th century Latin America caused more harm than good; military intervention really made no difference in improving the economy rather resistance began to grow as people became affected by military dictatorship which constantly violated human rights. However, there is the potential for military coups in Latin America today but the risk of their intervention is reduced because of its legacy of the past. Ideally, the role of the military is to provide security and stability rather than harbour political ambitions.

Efficient Markets Hypothesis (EMH)

Efficient Markets Hypothesis (EMH) INTRODUCTION: Much of modern investment theory and practice is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the â€Å"Capital Asset Pricing Model†, the â€Å"Arbitrage Pricing Theory†, the â€Å"Cox Ingersoll-Ross theory† of the term structure of interest rates, and the â€Å"Black-S[choles/Merton option pricing model†, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it can overreact one day and make amends the next. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that Investors are not as rational as traditional theory has assumed, and biases in their decision-making can have a cumulative effect on asset prices. To many researchers behavioral finance is a revolution, transforming how people see the markets and what influences prices. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp†. (Gervais, 2001, P.2) . On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. He gave little credit to behaviorist explanations of trends and anomalies(any occurrence or object that is strange, unusual, or unique) arguing that data-mining techniques make it possible to locate patterns. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally the market behavior displayed is attributed to overreaction and sometimes to under reaction. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are the result of underlying economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both academic psychology and traditional finance and so the models that are being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior influencing asset prices, suggesting that behavioral finance is in its developmental stage and not yet a mature one, theres a lot of disagreement but productive one. Hirshleifer agrees that applying behavioral-finance concepts to corporate finance can pay off. If managers are imperfectly rational, he says, perhaps they are not evaluating investments correctly. They may make bad choices in their capital-structure decisions. Few people realistically think behavioral finance will displace efficient-markets theory. On the other hand, the idea that investors and managers are not uniformly rational makes insightful sense to many people. Traditional Finance Empirical Evidence: â€Å"Traditional theory assumes that agents are rational the law of one price holds† that is a perfect scenario. Where the law of â€Å"One price† states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as â€Å"Arbitrageurs†. And the agents rationality explains the behavior of investor â€Å"Professional Individual† which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of â€Å"noise traders† (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naà ¯ve diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviours. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be ‘rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited â€Å"assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category ‘instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as ‘What is the cost of capital for this firm? or ‘What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of ‘testability and ‘predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. BODY: A cognitive bias is a persons tendency to make errors, based on cognitive factors. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings. (Crowell, 1994, p. 1) â€Å"Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing†. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups. One who forecasts positively and one negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the â€Å"illusion of validity† which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. There are three main themes in behavioral finance and economics Heuristics: People often make decisions based on approximate rules of thumb, not strictly rational analysis. See also cognitive biases and bounded rationality. Prospect theory Loss aversion Status quo bias Gamblers fallacy Self-serving bias Money illusion Framing: The way a problem or decision is presented to the decision maker will affect their action. Cognitive framing Mental accounting Anchoring Market inefficiencies: There are explanations for observed market outcomes that are contrary to rational expectations and market efficiency. These include mis-pricings, non-rational decision making, and return anomalies. Richard Thaler, in particular, has described specific market anomalies from a behavioral perspective. Anomalies (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Equity premium puzzle Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Models in behavioral economics are typically addressed to a particular observed market anomaly and adjust standard neo-classical models by describing decision makers as using heuristics and being affected by framing effects. In general, economics sits within the neoclassical framework, though the standard assumption of rational behavior is often challenged. Loix et. Al in their paper â€Å"Orientation towards Finances† explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior Investing and cognitive bias: Money Managers Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem.The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less than optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rate companies in their industries on eight factors: Quality of management, Quality of products services, Innovativeness, Long term investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise use of corporate assets. The assumptions that we made were that that â€Å"Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns†.(Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk, Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: â€Å"We have a double cognitive error: a Good company make good stocks (representativeness), and involves less responsibility(Less aversion to regret† (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 â€Å"Tony Blair† stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment In 2005 president bush also portfolio announced one such plan for personal account â€Å"life cycle fund† which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily tat same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theoretical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. Agents Rationality: Global culture Culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people actually arise as a logical consequence of a belief system of a nation group of people. Cultural factor were found to have great influence on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebellious, other than these we find more factors in producing internationally- similar human behaviors then just rational reactions. Therefore it is a difficult job to decide in what avenues global culture exerts Efficient Markets Hypothesis (EMH) Efficient Markets Hypothesis (EMH) INTRODUCTION: Much of modern investment theory and practice is predicated on the Efficient Markets Hypothesis (EMH), the assumption that markets fully and instantaneously integrate all available information into market prices. Underlying this comprehensive idea is the assumption that the market participants are perfectly rational, and always act in self-interest, making optimal decisions. These assumptions have been challenged. It is difficult to tip over the Neo classical convention that has yielded such insights as portfolio optimization, the â€Å"Capital Asset Pricing Model†, the â€Å"Arbitrage Pricing Theory†, the â€Å"Cox Ingersoll-Ross theory† of the term structure of interest rates, and the â€Å"Black-S[choles/Merton option pricing model†, all of which are predicated on the EMH (Efficient Market Hypothesis) in one way or another. At few points the EMH criticizes the existing literature of behavioral finance, which shows the difference of opinion on psychology economics. The field of psychology has its roots in empirical observation, controlled experimentation, and clinical applications. According to psychology, behavior is the main entity of study, and only after controlled experimental dimensions do psychologists attempt to make inferences about the origins of such behavior. On the contrary, economists typically derive behavior axiomatically from simple principles such as expected utility maximization, making it easier for us to predict economic behavior that are routinely refuted empirically The biggest threats to Modern Portfolio theory is the theory of Behavioral Finance. It is an analysis of why investors make irrational decisions with respect to their money, normal distribution of expected returns generally appears to be invalid and also that the investors support upside risks rather than downside risks. The theory of Behavioral finance is opposite to the traditional theory of Finance which deals with human emotions, sentiments, conditions, biases on collective as well as individual basis. Behavior finance theory is helpful in explaining the past practices of investors and also to determine the future of investors. Behavioral finance is a concept of finance which deals with finances incorporating findings from psychology sociology. It is reviewed that behavioral finance is generally based on individual behavior or on the implication for financial market outcomes. There are many models explaining behavioral finance that explains investors behavior or market irregularities where the rational models fail to provide adequate information. We do not expect such a research to provide a method to make lots of money from the inefficient financial market very fast. Behavioral finance has basically emerged from the theories of psychology, sociology and anthropology the implications of these theories appear to be significant for the efficient market hypothesis, that is based on the positive notion that people behave rationally, maximize their utility and are able to prices observation, a number of anomalies (irregularities) have appeared, which in turn suggest that in the efficient market the principle of rational behavior is not always correct. So, the idea of analyzing other model of human behavior has came up. Further (Gervais, 2001) explained the concept where he says that People like to relate to the stock market as a person having different moods, it can be bad-tempered or high-spirited, it can overreact one day and make amends the next. As we know that human behavior is unpredictable and it behaves differently in different situations. Lately many researchers have suggested the idea that psychological analysis of investors may be very helpful in understanding the financial markets better. To do so it is important to understand the behavioral finance presenting the concept that Investors are not as rational as traditional theory has assumed, and biases in their decision-making can have a cumulative effect on asset prices. To many researchers behavioral finance is a revolution, transforming how people see the markets and what influences prices. The paradigm is shifting. People are continuing to walk across the border from the traditional to the behavioral camp†. (Gervais, 2001, P.2) . On the contrary some people believe that may be its too early call it a revolution. Eugene Fama( Gervais, 2001) argued that Behavioral finance has not really shown impacts on the world prices, and the models contradict each other on different point of times. He gave little credit to behaviorist explanations of trends and anomalies(any occurrence or object that is strange, unusual, or unique) arguing that data-mining techniques make it possible to locate patterns. Other researchers have also criticized the idea that the behavioral finance models tend to replace the traditional models of market functions. The weaknesses in this area, explained by him (Gervais, 2001) are that generally the market behavior displayed is attributed to overreaction and sometimes to under reaction. Where People take the behavior that seems to be easy for the particular study regardless of the fact that whether these biases are the result of underlying economic forces or not. Secondly, Lack of trained and expert people. The field does not have enough trained professionals both academic psychology and traditional finance and so the models that are being put up together are improvised. David Hirshleifer (Gervais, 2001) focuses on the individual behavior influencing asset prices, suggesting that behavioral finance is in its developmental stage and not yet a mature one, theres a lot of disagreement but productive one. Hirshleifer agrees that applying behavioral-finance concepts to corporate finance can pay off. If managers are imperfectly rational, he says, perhaps they are not evaluating investments correctly. They may make bad choices in their capital-structure decisions. Few people realistically think behavioral finance will displace efficient-markets theory. On the other hand, the idea that investors and managers are not uniformly rational makes insightful sense to many people. Traditional Finance Empirical Evidence: â€Å"Traditional theory assumes that agents are rational the law of one price holds† that is a perfect scenario. Where the law of â€Å"One price† states that securities with the same pay off have same price, but in real world this law is violated when people purchase securities in one market for immediate resale in another, in search of higher profits because of price differentials known as â€Å"Arbitrageurs†. And the agents rationality explains the behavior of investor â€Å"Professional Individual† which is generally inconsistent with the rationality or the future predictions. If a market achieves a perfect scenario where agents are rational law of one price holds then the market is efficient. With the availability of amount of information, the form of market changes. It is unlikely that market prices contain all private information. The presence of â€Å"noise traders† (traders, trading randomly not based on information). Researches show that stock returns are typically unpredictable based on past returns where as future returns are predictable to some extent. Few examples from the past literature explains the problem of irrationality which occurs because of naà ¯ve diversification, behavior influenced by framing, the tendency of investors of committing systematic errors while evaluating public information.(Glaser et al, 2003) Recent studies suggest that peoples` attitude towards the riskiness of a stock in future the individual interpretation may explain the higher level trading volume, which itself is a vast topic for insight. A problem of perception exist in the investors that Stocks have a higher risk adjusted returns than bonds. Another issue with the investors is that these investors either care about the whole stock portfolio or just about the value of each single security in their portfolio and thus ignore the correlations. The concept of ownership society has been promoted in the recent years where people can take better care of their own lives and be better citizen too if they are both owner of financial assets and homeowners. As a researcher suggested that in order to improve the lives of less advantaged in our society is to teach them how to be capitalist, In order to put the ownership society in its right perspective, behavioral finance is needed to be understood. The ownership society seems very attractive when people appear to make profits from their investments. Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. (Shiller, 2006) According to (Glaser et al, 2003) there are two approaches towards Behavioral Finance, where both tend to have same goals. The goals tend to explain observed prices, Market trading Volume Last but not the least is the individual behavior better than traditional finance models. Belief Based Model: Psychology (Individual Behavior) Incorporates into Model Market prices Transaction Volume. It includes findings such as Overconfidence, Biased Self- Attrition, and Conservatism Representativeness. Preference Based Model: Rational Friction or from psychology Find explanations, Market detects irregularities individual behavior. It incorporates Prospect Theory, House money effect other forms of mental accounting. Behavioral Finance and Rational debate: The article by (Heaton and Rosenberg,2004) highlights the debate between the rational and behavioral model over testability and predictive success. And we find that neither of them actually offers either of these measures of success. The rational approach uses a particular type of rationalization methodology; which goes on to form the basis of behavior finance predictions. A closer look into the rational finance model goes on to show that it employs ex post rationalizations of observed price behaviours. This allows them greater flexibility when offering explanations for economic anomalies. On the other hand the behavior paradigm criticizes rationalizations as having no concrete role in predicting prices accurately, that utility functions, information sets and transaction costs cannot be ‘rationalized. Ironically they also reject the rational finances explanatory power which plays an essential role in the limits of arbitrage, which actually makes behavioral finance possible. Milton Friedmans theory lays the basis of positive economics. His methodology focuses on how to make a particular prediction; it is irrelevant whether a particular assumption is rational or irrational. According to this methodology, the rational finance model relies on a limited â€Å"assumption space since all assumptions that are supposedly not rational have been eliminated. This is one of the major reasons behind the little success in rational finance predictions. Despite the minimal results, adherents of this model have criticized the behavioral model as lacking quantifiable predictions that are based on mathematical models. Rational finance has targeted a more important aspect in the structure of the economy, i.e. investor uncertainty, which further cause financial anomalies. In explaining these assertions, the behavioural emphasises the importance of taking limits in arbitrage. Friedmans methodological approach falls into the category ‘instrumentalism, which basically states that theories are tools for predictions and used to draw inferences. Whether an assumption is realistic or rational is of no value to an instrumentalist. By narrowing what may or may not be possible, one will inevitably eliminate certain strategies or behaviors which might in fact go on to maximize utility or profits based on their uniqueness. An assumption could be irrational even in the long run, but it is continuously revised and refined to make it into something useful. In opposition to this, many individuals have gone on to say that behaviouralists are not bound by any constraints thus making their explanations systematically irrational. Rubinstein (2001) described how when everyone fails to explain a particular anomaly, suddenly a behavioral aspect to it will come up, because that can be based on completely abstract irrational assumptions. To support rationality, Rubinstein came up with two arguments. Firstly he went on to say that an irrational strategy that is profitable, will only attract copy cat firms or traders into the market. This is supported when a closer look is given towards limits to arbitrage. Secondly through the process of evolution, irrational decisions will eventually be eliminated in the long run. The major achievements characterized of the rational finance paradigm consist of the following: the principle of no arbitrage; market efficiency, the net present value decision rule, derivatives valuation techniques; Markowitzs (1952) mean-variance framework; event studies; multifactor models such as the APT, ICAPM, and the Consumption- CAPM. Despite the number of top achievements that supporters of the rational model claim, the paradigm fails to answer some of the most basic financial economic questions such as ‘What is the cost of capital for this firm? or ‘What is its optimal capital structure?; simply because of their self imposed constraints. So far this makes it seem like rational finance and behavioral finance are mutually exclusive. Contrary to this, they are actually interdependent, and overlap in several areas. Take for instance the concept of mispricing when there is no arbitrage. Behavior finance on the other hand suggests that this may not be the case; irrational assumptions in the market will still lead to mispricing. Further even though certain arbitrageurs may be able to identify irrationality induced mispricing, because of the imperfect market information, they are unable to convince investors of its existence. Over here, the rational model is accepting the existence of anomalies which are affected both through the factors of risk and chance; therefore coinciding with the perspective of behavioral finance. Two instances are clear examples of how rationalization is an important limit of arbitrage: i) the build-up and blow-up of the internet bubble; and ii) the superiority of value equity strategies. If we focus on the latter, we are able to see behavioral finance literature that highlights the superiority of such strategies in the ability of analysts to extrapolate results for investors. This is possible when rationalization is taken as a limit to arbitrage. Similarly these strategies may also limit arbitrage against mispricing, through the great risk associated with stocks. In explaining most anomalies it is essential that analysts first conclude whether pricing is rational or not. To prove their hypothesis that irrationality-induced mispricing exists, behaviouralists may find it easier if they accepted the role of rationalization in limits of arbitrage. Slow information diffusion and short-sales constraints are other factors that explain mispricing. However these factors alone cannot form the basis of a strong and concrete explanation that will clarify pricing across firms and also across time. Those supporting the rational paradigm attack behavioral finance adherents in that their predictions for the financial market have been made on irrational assumptions; that are not supported by concrete mathematical or scientific models. In their view the lack of concrete discipline in the methodology adopted in behavior finance leads to the lack of testing in their forecasts. On the other hand the rational model is criticized for its lack of success in financial predictions. The behaviouralists claim that this limitation exists because the supporters of rational finance dismiss aspects of the economic market simply because it may not fall into explainable rational behavior. Both perspectives claim to align themselves with respect to the goals of ‘testability and ‘predictions, while at the same time continue to offer evidence against the other model. In reality however, rather than being exclusively mutual both paradigms assist one another in making their predictions. BODY: A cognitive bias is a persons tendency to make errors, based on cognitive factors. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings. (Crowell, 1994, p. 1) â€Å"Cognitive bias is the tendency of intelligent, well-informed people to consistently do the wrong thing†. The reason behind this cognitive bias is that the Human brain is made for interpersonal relationships and not for processing statistics. The paper discusses facility of forecasts. Generally it is said that the world is divided into two groups. One who forecasts positively and one negatively. These forecasts exaggerate the reliability of their forecasts and trace it to the â€Å"illusion of validity† which exists even when the illusionary character is recognized. (Fisher and Statman, 2000) discussed five cognitive bias, underlying the illusion of validity that are Overconfidence, Confirmation, Representativeness, Anchoring, and Hindsight (Shiller, 2002) discusses, that irrational behavior may disappear with more learning and a much more structured situation. As the past research proves it that may of cognitive biases in human judgment value uncertainty will change, they may be convinced if given proper instructions, on the part-experience of irrational behavior. There are three main themes in behavioral finance and economics Heuristics: People often make decisions based on approximate rules of thumb, not strictly rational analysis. See also cognitive biases and bounded rationality. Prospect theory Loss aversion Status quo bias Gamblers fallacy Self-serving bias Money illusion Framing: The way a problem or decision is presented to the decision maker will affect their action. Cognitive framing Mental accounting Anchoring Market inefficiencies: There are explanations for observed market outcomes that are contrary to rational expectations and market efficiency. These include mis-pricings, non-rational decision making, and return anomalies. Richard Thaler, in particular, has described specific market anomalies from a behavioral perspective. Anomalies (economic behavior) Disposition effect Endowment effect Inequity aversion Intertemporal consumption Present-biased preferences Momentum investing Greed and fear Herd behavior Anomalies (market prices and returns) Equity premium puzzle Efficiency wage hypothesis Limits to arbitrage Dividend puzzle Models in behavioral economics are typically addressed to a particular observed market anomaly and adjust standard neo-classical models by describing decision makers as using heuristics and being affected by framing effects. In general, economics sits within the neoclassical framework, though the standard assumption of rational behavior is often challenged. Loix et. Al in their paper â€Å"Orientation towards Finances† explains the individual financial management behavior, people dealing with their financial means. They have analyzed the Non-specific Financial behavior as already we see extensive research on the specific finance behavior such as saving, Taxation, Gambling, amassing debt. But they had given a lot of importance to stock market, investors and households. The analysis of general public`s behavior was done, where an ordinary man is not sure and simply act according to the guesses over their money related issues. It was also found that people interested in economic and financial matters are much more active in collecting specific information than general public, stating that financial behavior of household is an important relevant topic that needs to be discussed in much more details. Household financial management is similar to the financial management. The construct of orientation towards finances was developed where the individual ORTO FIN focuses on competencies (interest and skills). Having stronger money attitude is an indication of stronger orientation towards finances and much more effective competencies. Therefore we expect some relevance and similarity between corporate and household management behavior as both require organizing, forecasting, planning and control. (Loix et. al, 2005) analyzed general publics behavior in basically dividing them into two groups, Financial Information Personal financial planning. Also explaining some practical and theoretical gaps in the area of psychology of money usage, they concluded that ORTOFIN (Orientation towards finance) indicates the involvement of individuals in managing their finances. Proving out the point that active interest in financial information and an urge to plan expenses are two main factors. A stronger ORTFIN indicates: Greater use of debit accounts, Higher savings account, Wide variety of investments, Greater awareness of ones financial Intimate knowledge of the details of Ones savings/deposit accounts obsessed by money, Higher achievement and power in monetary terms, Further age is also inversely proportional. Shiller in 2006, in his article talked about the the co-evolution of neo-classical and behavior finance. In 1937 when A. Samuelsson one of the great economists wrote about people maximizing the present value of utility subject to a present vale budget constraint. Another judgment he realized was time being consistent human behavior where if at any time t 0 Where people reconsidered the problem of maximization from that date forward, they would not change their decision where as in real life it is totally opposite for example people sometimes try to control themselves by binding their future decision as from history we find out that that some of man make irrevocable trust in the taking out of life insurance as a compulsory savings measure. (shiller, 2006, p.) Considering personal saving rate, saving and down for no reason has emerged as a weakness of human self control. People seem to be vulnerable to complacency from time to time about providing for their own future. The distinction between neoclassical and behavioral finance have therefore been exaggerated. Both of them are not completely different from each other. Behavioral finance is more elastic willing to learn from other sciences and less concerned about the elegance of models whereby explaining human behavior Investing and cognitive bias: Money Managers Money management is a very popular phenomenon. The performance in the stock market is measured at the daily basis and not to wait for a highly subjective annual review of ones performance by ones superior. Market grades you on a daily basis. The smarter one is, the more confident one becomes of ones ability to succeed, clients support them by trusting them that eventually helps their careers. But the truth is that few money managers put in sufficient amount of time and effort to figure out what works and develop a set of investment principles to guide their investment decisions (Browne, 2000). Further Browne discussed the importance of asset allocation and risk aversion, in order to understand why we do what we do regardless of whether it is rational or not. General public opts for money Managers to deal with their finances and these managers are categorized in three ways: Value Managers, Growth Managers and Market Neutral Managers. The vast majority of money managers are categorized as either value managers or growth managers although a third category, market neutral managers, is gaining popularity these days and may soon rival the so-called strategies of value and growth. Some investment management firms even are being cautious by offering all styles of investments. What too few money managers do is analyze the fundamental financial characteristics of portfolios that produce long-term market beating results, and develop a set of investment principles that are based on those findings. Difference of opinion on the definition of Value is the problem.The reasons for this are two-fold, one being the practical reality of managing large sums of money, and the other related to behavior. As the assets under management of an advisor grow, the universe of potential stocks shrinks Analyzing that why individual and professional investors do not change their behavior even when they face empirical evidence, that suggests that their decisions are less than optimal. An answer to this question is said to be that being a contrarian may simply be too risky for the average individual or professional. If a person is wrong on the collective basis, where everyone else also had made a mistake, the consequences professionally and for ones own self-esteem are far less than if a person is wrong alone. The herd instinct allows for the comfort of safety in numbers. The other reason is that individuals try to behave the same way and do not tend to change courses of action if they are happy. If the results are not too painful individuals can be happy with sub-optimal results. Moreover, individuals who tend to be unhappy make changes often and eventually end up being just as unhappy in their new circumstances. According to the traditional view of Investment management, fundamental forces drive markets, however many other investment firms considers to be active and working out based on their experienced Judgment. It is also believed that Judgmental overrides of Value Fundamental forces of markets can be lethal as well as a cause of Financial Disappointment. From the history it has been found that people Override at the wrong times and in most cases would be better off sticking to their investment disciplines (Crowell, 1994) and the reason to this behavior is the Cognitive bias. According to many researchers, stocks of small companies with low price/book ratios provide excess returns. Therefore, given a choice among small cheap stocks large high priced stocks, prominent investors (financial analysts, senior company executives and company directors) will certainly prefer the small cheap ones. But the fact is opposite to this situation where these prominent investors would opt for large high priced ones and so suffer from cognitive bias and further regret. According to a survey in 1992/1993, a research was carried out that included senior executives directors where they were suppose to rate companies in their industries on eight factors: Quality of management, Quality of products services, Innovativeness, Long term investment value, Financial soundness, Ability to attract, develop and keep talented people, Responsibility to the community and environment, Wise use of corporate assets. The assumptions that we made were that that â€Å"Long term investment value should be negatively correlated with size since small stocks provide superior returns. Long term Investment value should have a negative correlation with Price/book since low Price/Book stocks provide superior returns†.(Crowell, 1994). Whereas the results of the survey were contrary that stated that Long Term Investment had a positive correlation with the size and also that the Long term investment value had a positive correlation with the Price/Book stocks. According to Shefrin and statman, prominent investors overestimate the probability that a good company is a good stock, relying on the representative heuristics, concluding that superior companies make superior stocks. Aversion to Regret: aversion to regret is different from aversion to risk, Regret is acute when the individual must take responsibility for the final outcome. Aversion to regret leads to a preference for stocks of good companies. The choice of the stocks of bad companies involves more personal responsibility and higher probability of regret. Therefore, we find there are two major Cognitive errors: â€Å"We have a double cognitive error: a Good company make good stocks (representativeness), and involves less responsibility(Less aversion to regret† (Crowell, 1994,p.3) The Anti Cognitive bias actions would be admitting to your owned stocks, admitting earlier investment mistakes. Further Taking the responsibility for the actions to improve their performance in the future. The reasons for all the available disciplines, tools, and quantitative techniques is to deal with the Cognitive bias error, where the quantitative investment techniques enables the investment managers to overcome cognitive bias, follow sound investment, and eventually be successful contrarian investor(one who rejects the majority opinion, as in economic matters). Behavioral finance also is very helpful in understanding justifying government involvement in the investing decisions of individuals. The failure of millions of people to save properly for their future is also a core problem of behavioral finance. With the help of two very important examples Shiller explains how Government involvement can influence financial investments of individuals. In April 2005 â€Å"Tony Blair† stated a program when all new born babies were given a birthday present of 250 to 500. The present were to choose among a number of investment alternatives to invest until child comes of age. This is an effect done in order to make the parents feel connected with investments and modern economy. Another example: as it is said that people should be heavily active in stock market when they are young and so generally should reduce the activity with age. According to the conventional rule people should have 100 Age = % age of investment In 2005 president bush also portfolio announced one such plan for personal account â€Å"life cycle fund† which would be among the option that works will be offered to invest their personal account. It was A centerpiece of the presidents proposal bur a major point to be noticed was the default option. An important aspect of behavioral finance is the human attention is capricious focuses heavily tat same times on financial calculations and are subject to distraction and dissipation of default option is central. All this brings us a question that what should an intertemporal optimizer do to manage his portfolio over the lifetime. According to Samuelson someone who wished to maximize the expected value of his intertemporal utility function by managing the allocation of the portfolio between a high yielding asset and less yielding asset would not actually change the allocation through time. Neoclassic finance appears highly relevant to such a discussion in that it offers the appropriate theoretical framework for considering what people ought to do with the portfolio if not what they actually do. Behavioral is beginning to play an important role in public policy such as in social security reforms. Agents Rationality: Global culture Culture Social Contagion: The selective attention exhibited by a human mind is the concept of culture. Every nation, tribe or asocial group has a social cognition reinforced by conversation ritual and symbols, rituals and supposition of a particular nation has a subtle but far reliability affect on human behavior. Some researchers found that the unique customs of people actually arise as a logical consequence of a belief system of a nation group of people. Cultural factor were found to have great influence on rational or irrational behavior. We find many factors that are same across countries , e.g fashion, music, movies, youthful rebellious, other than these we find more factors in producing internationally- similar human behaviors then just rational reactions. Therefore it is a difficult job to decide in what avenues global culture exerts