Behavioral Finance: An Introduction

43 Pages Posted: 18 Oct 2009 Last revised: 16 Dec 2011

See all articles by Guido Baltussen

Guido Baltussen

Erasmus University Rotterdam (EUR); Northern Trust Corporation - Northern Trust Asset Management

Date Written: January 13, 2009


This survey introduces and reviews the field of behavioral finance. It outlines the traditional finance approach, which builds upon rational acting investors, its assumptions, and its shortcomings. Moreover, it surveys the main findings from psychology and sociology that contrast with this traditional finance approach, and it provides examples of situations and studies that reveal the relevance of these findings for financial markets and its participants.

Keywords: behavioral finance, investor psychology, investor behavior, financial markets, market efficiency, individual decision making

JEL Classification: A12, G00, G10, G11, G12, G14

Suggested Citation

Baltussen, Guido, Behavioral Finance: An Introduction (January 13, 2009). Available at SSRN: or

Guido Baltussen (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA

Northern Trust Corporation - Northern Trust Asset Management ( email )

50 South LaSalle Street
Chicago, IL 60603
United States

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