Chapter 26. Behavioral Finance
Published Jan 14, 2008 · M. Glaser, Markus Nöth and, Martin Weber
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Abstract
. Abstract This article provides a brief introduction to behavioral finance. Behavioral finance encompasses research that drops the traditional assumptions of expected utility maximization with rational investors in efficient markets. The two building blocks of behavioral finance are cognitive psychology (how people think) and the limits to arbitrage (when markets will be inefficient). The growth of behavioral finance research has been fueled by the inability of the traditional framework to explain many empirical patterns, including stock market bubbles in Japan, Taiwan, and the U.S.
Study Snapshot
Key takeawayBehavioral finance research explores cognitive psychology and limits to arbitrage, challenging traditional assumptions and explaining empirical patterns like stock market bubbles.
PopulationOlder adults (50-71 years)
Sample size24
MethodsObservational
OutcomesBody Mass Index projections
ResultsSocial networks mitigate obesity in older groups.