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The entropy theory implications in behavioural finance

Author

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  • Aurora MURGEA

    (West University of Timisoara)

Abstract

Understanding the decisional phenomenon in the modern capital markets is impossible nowadays without the psychological component of the investor’s attitude. A large number of the behavioural finance theories are based on a limited number of psychological biases, in order to build the foundation of the investor decision. In this context, the proposed paper uses the entropy law (one of the universal laws applicable in informational field beginning from 1870) as a way to approach the investor’s attitude.

Suggested Citation

  • Aurora MURGEA, 2009. "The entropy theory implications in behavioural finance," Finante - provocarile viitorului (Finance - Challenges of the Future), University of Craiova, Faculty of Economics and Business Administration, vol. 1(9), pages 197-201, May.
  • Handle: RePEc:aio:fpvfcf:v:1:y:2009:i:9:p:197-201
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    More about this item

    Keywords

    entropy theory; behavioural finance; investor's attitude;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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