Behavioural Finance and Shipping Investment

Behavioural finance is the study of how psychology affects the behaviour of practitioners in finance. The applicability of behavioural finance in shipping can be justified by a series of stylised facts related to both the physical and the FFA markets. This chapter focuses on the representativeness heuristic and the existence of heterogeneous and biased beliefs, investor sentiment, and herd mentality in the drybulk market. Looking forward, much remains to be done to better understand the behavioural dimension in shipping investment decisions. However, the potential payoffs will be substantial to a variety of market players from shipping companies, charterers, and investors, to providers of capital, agencies, and regulators.