From Efficient Markets Theory to Behavioral Finance
Top Cited Papers
Open Access
- 1 February 2003
- journal article
- Published by American Economic Association in Journal of Economic Perspectives
- Vol. 17 (1), 83-104
- https://doi.org/10.1257/089533003321164967
Abstract
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 blossoming of research on behavioral finance. Some important developments since 1990 include feedback theories, models of the interaction of smart money with ordinary investors, and evidence on obstacles to smart money.Keywords
This publication has 33 references indexed in Scilit:
- Bubbles, Human Judgment, and Expert OpinionCFA Magazine, 2002
- Measuring Bubble Expectations and Investor ConfidenceJournal of Psychology and Financial Markets, 2000
- Efficient Capital Markets: IIThe Journal of Finance, 1991
- Implications of Security Market Data for Models of Dynamic EconomiesJournal of Political Economy, 1991
- Noise Trader Risk in Financial MarketsJournal of Political Economy, 1990
- Dividend Innovations and Stock Price VolatilityEconometrica, 1988
- The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and EvidenceThe Journal of Finance, 1985
- An intertemporal asset pricing model with stochastic consumption and investment opportunitiesJournal of Financial Economics, 1979
- Judgment under Uncertainty: Heuristics and BiasesScience, 1974
- Efficient Capital Markets: A Review of Theory and Empirical WorkThe Journal of Finance, 1970