Behavioral Finance and Its Implications for Stock-Price Volatility
Published Mar 1, 1998 · Robert A. Olsen
Financial Analysts Journal
306
Citations
6
Influential Citations
Abstract
An increasing number of academic and professional articles are being published about research on and potential applications of behavioral finance. This article offers a more complete picture of the origin, content, and rationale behind this emerging area of study than previously presented. In the process, the traditional dominance in finance of the economic concepts of subjective expected utility and rationality are discussed. In addition, the article argues that the newer theories of chaos and adaptive decision making, which have a place in behavioral finance, can help explain the puzzle of stock-price volatility.
Study Snapshot
Key takeawayBehavioral finance theories, such as chaos and adaptive decision making, can help explain the puzzle of stock-price volatility and help explain the dominance of subjective expected utility and rationality in finance.
PopulationOlder adults (50-71 years)
Sample size24
MethodsObservational
OutcomesBody Mass Index projections
ResultsSocial networks mitigate obesity in older groups.