The Psychology of Financial Choices: From Classical and Behavioral Finance to Neurofinance

Abstract

In this paper, we address theoretical developments of choice models in the financial field, starting with the efficient market hypothesis (EMH) in financial markets and its implications, then moving on to a review of the theoretical and empirical challenges posed by psychological and behavioral studies to the EMH, paying particular attention, once again, to these arguments’ implications on the activity of financial operators. Finally, we look at the most recent studies aimed at identifying the neurophysiological links of financial choices.

Keywords: Behavioral Economics, NeuroEconomics

JEL Classification: G40 ,G41,D87