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Behavioral Finance

Name: Behavioral Finance
Creator: Hirshleifer, David
Keywords: Judgment and Decision Making, PsyArXiv|Social and Behavioral Sciences|School Psychology, heuristics, Social and Behavioral Sciences, jel:G02, investor psychology, reference dependence, PsyArXiv|Social and Behavioral Sciences|Cognitive Psychology|Reasoning, jel:G1, Memory

descriptionPublicationkeyboard_double_arrow_right Article , Preprint 01 Jan 2014 United States English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

Authors: Hirshleifer, David;

doi: 10.2139/ssrn.2480892 , 10.31234/osf.io/vf752 , 10.1146/annurev-financial-092214-043752

Behavioral Finance

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Abstract

Behavioral finance studies the application of psychology to finance, with a focus on individual-level cognitive biases. I describe here the sources of judgment and decision biases, how they affect trading and market prices, the role of arbitrage and flows of wealth between more rational and less rational investors, how firms exploit inefficient prices and incite misvaluation, and the effects of managerial judgment biases. There is need for more theory and testing of the effects of feelings on financial decisions and aggregate outcomes. Especially, the time has come to move beyond behavioral finance to "social finance", which studies the structure of social interactions, how financial ideas spread and evolve, and how social processes affect financial outcomes.

Country

United States

Related Organizations

University of California System
United States
University of California, Irvine
United States
National Bureau of Economic Research
United States

Keywords

19 Research products, page of 2

Impact byBIP!

	citations This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	377
	popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.	Top 0.1%
	influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	Top 1%
	impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.	Top 1%