Tuesday 1 March 2016

Improve education could narrow the differences in financial decision making quality


People always make decisions of different qualities, because of their unique characteristics. People with different educational backgrounds and experience make different judgments when facing a same problem. This is a very normal and everyone could understand this. However, such situation makes information always be asymmetric, as people have different processes of information filtering and analysis, which means people will come out with different relevant information and expected futures. Therefore, is it possible to narrow the differences in decision making qualities by providing similar standards of education? Narrowing the differences in decision making qualities could also mitigate information asymmetry. This may mitigate the volatility in the market. To conclude, improving education could reduce the wealth gap caused by the different financial or investment decision making qualities.

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