Behavioral Finance in Joseph De La Vega’s Confusion De Confusiones
Posted: 13 Sep 2012
Date Written: September 12, 2012
Abstract
In this paper, we link Joseph de la Vega’s work Confusion de Confusiones, written in 1688, with current behavioral finance and propose that Vega be considered the first precursor of modern behavioral finance. In addition to describing excessive trading, overreaction and underreaction, and the disposition effect, Vega vividly portrays how investors behaved three hundred years ago and includes interesting documentation on investor biases, such as herding, overconfidence and regret aversion.
Keywords: behavioral finance, investor biases, stock market history, overconfidence, herding, regret aversion
JEL Classification: G02, G19, B19
Suggested Citation: Suggested Citation