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Behavioral Finance: History and Foundations

Author

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  • Pavlo Illiashenko

    (Tallinn University of Technology, School of Business and Governance)

Abstract

Recent evidence suggests that ideology has the potential to affect academic research in economics and that exposure to a wide range of approaches may increase intellectual diversity, eventually leading to better decisions. Therefore, writing a literature review in behavioral finance, in principle, can bring benefits to a wide range of readers, especially since the field of behavioral finance itself has already grown into a complex web of related but distinct sub-fields and reached a stage when it can guide policy decisions. This review differs from the existent ones as it focuses on the history of the field and its psychological foundations. While the review of psychological foundations is necessary to appreciate the benefits of a behavioral approach and understand its limitations, even a brief historical detour may provide a compelling case against a naive dichotomy between behavioral and classical finance.

Suggested Citation

  • Pavlo Illiashenko, 2017. "Behavioral Finance: History and Foundations," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 239, pages 28-54.
    • Handle: RePEc:ukb:journl:y:2017:i:239:p:28-54
    DOI: 10.26531/vnbu2017.239.028
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    File URL: https://journal.bank.gov.ua/en/article/2017/239/02
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    References listed on IDEAS

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    Cited by:

    1. Pavlo Illiashenko, 2017. "Behavioral Finance: Household Investment and Borrowing Decisions," Visnyk of the National Bank of Ukraine, National Bank of Ukraine, issue 242, pages 28-48.
    2. Kumar, Satish & Rao, Sandeep & Goyal, Kirti & Goyal, Nisha, 2022. "Journal of Behavioral and Experimental Finance: A bibliometric overview," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    3. Antti Paatela & Jordi Weiss, 2021. "Behavioral Analysis of Sustained Individual Investors," European Journal of Economics and Business Studies Articles, Revistia Research and Publishing, vol. 7, July -Dec.
    4. Bozhidar Nedev, 2019. "Historical roots of behavioural financial thought," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 33-50.

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    More about this item

    Keywords

    Behavioral finance; classical finance;

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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