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Toward a General Model of Financial Markets

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Abstract

This paper aims to discuss the possibilities of capturing efficient market hypothesis and behavioral finance under a general framework using the literature of decision theories and information sciences. The focus is centered on the broad definition of rationality, the imprecision and reliability of information. The main thesis advanced is that the root of behavioral anomalies comes from the imprecision and reliability of information. Modeling on basis of imprecision and reliability of information within the broad definition of rationality will lead us to a more general model of financial markets.

Suggested Citation

  • Nihad Aliyev & Xue-Zhong He, 2016. "Toward a General Model of Financial Markets," Research Paper Series 371, Quantitative Finance Research Centre, University of Technology, Sydney.
    • Handle: RePEc:uts:rpaper:371
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    File URL: https://www.uts.edu.au/sites/default/files/qfr-archive-03/QFR-rp371.pdf
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    References listed on IDEAS

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    Cited by:

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    3. Confente, Ilenia & Scarpi, Daniele & Russo, Ivan, 2020. "Marketing a new generation of bio-plastics products for a circular economy: The role of green self-identity, self-congruity, and perceived value," Journal of Business Research, Elsevier, vol. 112(C), pages 431-439.

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    More about this item

    Keywords

    Efficient markets; Behavioral finance; Decision theory; Information uncertainty;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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