92 Pages Posted: 28 Mar 2001
Date Written: February 26, 2001
The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for understanding decision biases, evaluates the a priori arguments and the capital market evidence bearing on the importance of investor psychology for security prices, and reviews recent models.
Suggested Citation: Suggested Citation
Hirshleifer, David A., Investor Psychology and Asset Pricing (February 26, 2001). AFA 2001 New Orleans Meetings. Available at SSRN: https://ssrn.com/abstract=265132 or http://dx.doi.org/10.2139/ssrn.265132
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