The Theory of Planned Behavior in Financial Decision Making

Abstract

The Theory of Planned Behavior examines how people’s goals and intentions are shaped by their pre-existing attitudes towards behaviors which accomplish those goals, the individual and social norms that influence goals and behavior, and the (perception of) forces that limit an individual’s ability to work towards their goals. I will be looking at various studies that apply this model to financial decision making, and will consider how these three factors influence individuals’ financial goals, and the actions they take in order to achieve them. The ultimate objective is to develop an investment planning model which accounts for the factors which shape our goals and actions, so that people can make decisions that maximize their subjective utility, after considering how their decisions are shaped by factors they might not have considered.