The run of Lithuanian households financial behavior

Abstract

The paper discusses application of behavioural finance theories for more profitable financial and investment decisions of Lithuanian households. The role of behavioural finance during the process of taking financial decisions and productivity of financial activity of market participants is analyzed. The reasons of difference between real behaviour of market participants in the situations of uncertainty and risk and the assumption of rational behaviour of economic entities, underlying in classic financial theories, are revealed. The basic theories of behavioural finance and possible opportunities of their use for analysis of processes and phenomena, taking place at financial market which cannot be explained within the limits of classic financial theories, are described. Empirical research found the evidence of behavioural finance impact on Lithuanian households' financial decisions, which lead to conclusion of implementation behavioural finance theories in Lithuanian households' financial practice.