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Stochastic Processes in Finance and Behavioral Finance

  • Steinbacher, Matjaz

In the paper, we put some foundations for studying asset pricing and finance as a stochastic and behavioral process. In such process, preferences and psychology of agents represent the most important factor in the decision-making of people. Individuals have their own ways of acquiring the information they need, how to deal with them and how to make predictions and decisions. People usually also do not behave consistent in time, but learn. Therefore, in order to understand the behavior on the markets, a new paradigm is needed.

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File URL: http://mpra.ub.uni-muenchen.de/13603/1/MPRA_paper_13603.pdf
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File URL: http://mpra.ub.uni-muenchen.de/13647/1/MPRA_paper_13647.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13603.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:13603
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