Anomalies in Economics and Finance

27 Pages Posted: 10 Feb 2011 Last revised: 3 Mar 2011

See all articles by Christopher L. Gilbert

Christopher L. Gilbert

VU University Amsterdam - Faculty of Economics and Business Administration; Centre for Economic Policy Research (CEPR)

Date Written: March 2, 2011

Abstract

The term “anomaly” played a crucial role in Thomas Kuhn’s characterization of scientific progress. For Kuhn, an anomaly is a puzzle which challenges an accepted paradigm. Puzzles only achieve anomalous status once an alternative paradigm becomes available which allows explanation of the puzzle. Anomalies were introduced into the finance literature by Michael Jensen but more as resolvable puzzles than Kuhnian anomalies. They entered economics via Richard Thaler who saw behavioural economics as the alternative to the neoclassical paradigm. Both authors use the term anomaly in a deliberately Kuhnian manner. Kuhn formulated his ideas by looking back across the history of physics. By contrast, behavioural economists use Kuhn’s concepts in a forward-looking manner as a marketing tool for their ideas.

Keywords: anomaly, behavioral, effects

JEL Classification: B23, B41

Suggested Citation

Gilbert, Christopher L., Anomalies in Economics and Finance (March 2, 2011). Available at SSRN: https://ssrn.com/abstract=1757735 or http://dx.doi.org/10.2139/ssrn.1757735

Christopher L. Gilbert (Contact Author)

VU University Amsterdam - Faculty of Economics and Business Administration ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31 20 444 6102/6060 (Phone)
+31 20 444 6020 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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