Investor Psychology and Asset Pricing
AbstractThe basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for understanding decision biases, evaluates the a priori arguments and the capital market evidence bearing on the importance of investor psychology for security prices, and reviews recent models.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5300.
Date of creation: 10 Feb 2001
Date of revision:
Publication status: Published in Journal of Finance 4.56(2001): pp. 1533-1597
investor psychology; asset pricing; behavioral finance; behavioral economics; anomalies; misvaluation; risk; decision biases; emotions; decision bias; arbitrage; capital markets;
Other versions of this item:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- G1 - Financial Economics - - General Financial Markets
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
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