Inefficient Markets: An Introduction to Behavioral Finance

Inefficient Markets: An Introduction to Behavioral Finance (Clarendon Lectures in Economics)

The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents models of such markets. These models explain the available financial data more accurately than the efficient markets hypothesis, and generate new predictions about security prices. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets.
Country USA
Brand Oxford University Press, USA
Manufacturer Oxford University Press
Binding Paperback
ItemPartNumber YES294873
Model YES294873
UnitCount 1
EANs 9780198292272
ReleaseDate 2000-04-20

Inefficient Markets: An Introduction to Behavioral Finance (Clarendon Lectures in Economics)