Abstract

http://ssrn.com/abstract=1597934
 
 

References (334)



 
 

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Behavioralizing Finance


Hersh Shefrin


Santa Clara University - Leavey School of Business


Foundations and Trends in Finance, Vol. 4, Nos. 1-2, pp. 1-184, 2010
SCU Leavey School of Business Research Paper No. 10-01

Abstract:     
Finance is in the midst of a paradigm shift, from a neoclassical based framework to a psychologically based framework. Behavioral finance is the application of psychology to financial decision making and financial markets. Behavioralizing finance is the process of replacing neoclassical assumptions with behavioral counterparts. This monograph surveys the literature in behavioral finance, and identifies both its strengths and weaknesses. In doing so, it identifies possible directions for behavioralizing the frameworks used to study beliefs, preferences, portfolio selection, asset pricing, corporate finance, and financial market regulation. The intent is to provide a structured approach to behavioral finance in respect to underlying psychological concepts, formal framework, testable hypotheses, and empirical findings. A key theme of this monograph is that the future of finance will combine realistic assumptions from behavioral finance and rigorous analysis from neoclassical finance.

Number of Pages in PDF File: 187

Keywords: behavioral finance, portfolio allocation, investor psychology, empirical finance, neoclassical finance, financial markets

JEL Classification: G00, G11, G14, G20, G30

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Date posted: May 2, 2010  

Suggested Citation

Shefrin, Hersh, Behavioralizing Finance. Foundations and Trends in Finance, Vol. 4, Nos. 1-2, pp. 1-184, 2010; SCU Leavey School of Business Research Paper No. 10-01. Available at SSRN: http://ssrn.com/abstract=1597934

Contact Information

Hersh Shefrin (Contact Author)
Santa Clara University - Leavey School of Business ( email )
Dept. of Finance
Santa Clara, CA 95053
United States
408-554-6893 (Phone)
408-554-4029 (Fax)
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