Behavioral Finance

Catalog description

Describes several puzzles in financial markets, including phenomena that are hard to explain using standard economic models. Develops several alternatives to standard economic models in which agents make errors or have preferences that differ from those typically assumed by economists. These "behavioral models" are motivated by evidence from psychology, lab experiments in economics, and field experiments, some of which are reviewed. Explores how such behavioral models can explain puzzles both at the level of individual investing and at an aggregate level (market volume and pricing).