Behavioral portfolio theory (BPT), put forth in 2000 by Shefrin and Statman,[1] provides an alternative to the assumption that the ultimate motivation for investors is the maximization of the value of their portfolios.
It suggests that investors have varied aims and create an investment portfolio that meets a broad range of goals.
A behavioral portfolio bears a strong resemblance to a pyramid with distinct layers.
The base layer is devised in a way that it is meant to prevent financial disaster, whereas, the upper layer is devised to attempt to maximize returns, an attempt to provide a shot at becoming rich.
They even propose in their initial article a Cobb–Douglas utility function that shows how money is allocated in the two mental accounts.