The Future of Finance

Abstract

The convergence of behavioral finance and artificial intelligence (AI) has attracted substantial attention in recent years, representing a dynamic amalgamation of insights stemming from psychology and economics with state-of-the-art technology. AI's prowess extends to bias detection, wherein it meticulously examines patterns in investment decisions. It adeptly identifies prevalent biases like loss aversion and overconfidence by contrasting responses to losses and gains. Furthermore, AI plays a crucial role in uncovering biases related to social and ethical considerations, such as ethnoracial equity, and aids in identifying and mitigating biases within AI models themselves. Cutting-edge frameworks, crowdsourced failure reports, bias auditing tools, and psychophysics-inspired methodologies all contribute to the comprehensive detection of biases. In summary, the synergy between behavioral finance and AI revolutionizes our comprehension of financial decision-making.