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In my work advising individuals on their investment strategies, I get somewhat of a front-row seat when it comes to observing behavioral investing in action. More than occasionally, I find myself explaining to a client why his or her desired course of action is likely to do more harm than good. But knowledge of market conditions and historical risk/return dynamics is hardly the sole determinant...

The efficient markets theory reached the height of its dominance in academic circles around the 1970s. Faith in this theory was eroded by a succession of discoveries of anomalies, many in the 1980s, and of evidence of excess volatility of returns. Finance literature in this decade and after suggests a more nuanced view of the value of the efficient markets theory, and, starting in the 1990s, a ...

Behavioral Finance is an economic and scientific study on human behavior. It is a research done on social cognitive and emotional biases to understand economic decision and how they affect markets. The behavioral finance is mainly concerned with the human rationality and its practical aspects. This theory is a study of Human psychology and Economics. Behavioral finance is the upcoming study of ...

In this paper, we study the optimal portfolio selection problem of weakly informed traders in the sense of Baudoin [1]. Instead of considering only expected utility maximizers, we also take into consideration different preference paradigms. In particular, we analyze a representative agent who follows the tenets of cumulative prospect theory as developed by Kahneman and Tversky [15], together wi...

Chapter overview The finance industry has been singled out as a case of rampant unethical behavior and corporate greed. Drawing on scientific research on unethical behavior from the disciplines of psychology, behavioral ethics, behavioral economics, and organizational behavior, I discuss three characteristics of the finance industry that might explain the high level of unethical behavior in thi...

of the Dissertation Three Essays on Asset Pricing, Portfolio Choice and Behavioral Finance.