Presentation Slides for 'Investor Psychology and Asset Pricing'
57 Pages Posted: 31 May 2018
Date Written: January 4, 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.
Prepublication version of paper: https://ssrn.com/abstract=265132.
Keywords: investor psychology, asset pricing, behavioral finance, misvaluation, risk, heuristics and biases
JEL Classification: D03, D14, D46, D84, G11, G12, G14, G32, G35, M41
Suggested Citation: Suggested Citation