Archivio per 26 giugno 2012

26
Giu
12

The implications of Behavioral Finance

See on Scoop.itBounded Rationality and Beyond
The debate in theoretical finance between the efficient market hypothesis and the field of the behavioral finance is of great interest. Since its emergence, the efficient market hypothesis has been the most important theory that explains the behavior of the various agents in the financial markets and neglects almost any potential impact of human behavior in the investment process. However, from the end of 1970s and the beginning of 1980s a growing number of researchers showed the anomalies of this theory. The anomalies of the modern portfolio models have prompted the development of what is now known as behavioral finance. Behavioral finance integrates psychology and economics in finance theory and has its roots in the pioneering work of psychologists Daniel Kahneman and Amos Tversky (1979). The purpose of this paper is to provide a synthesis of the behavioral finance literature over the past two decades.
See on docs.google.com

Annunci
26
Giu
12

A Non-Bayesian Approach to (Un)Bounded Rationality by Werner Güth

See on Scoop.itBounded Rationality and Beyond

Can one define and test the hypothesis of (un)bounded rationality in stochastic choice tasks without endorsing Bayesianism? Similar to the state specificity of assets, we rely on state-specific goal formation. In a given choice task, the list of state-specific goal levels is optimal if one cannot increase the goal level for one state without having to decrease that for other states. We show that this allows to relate optimality more easily to bounded rationality where we interpret goal levels as aspirations. If for the latter there exist choices satisfying all state-specific aspirations and if one such choice is used, we speak of satisficing which may or may not be optimal.

See on zs.thulb.uni-jena.de

26
Giu
12

Insertion of Bounded Rationality in Economic Science

See on Scoop.itBounded Rationality and Beyond

Downloadable! After having explained why economics introduced utility functions and later the axioms about behaviour in a risky environment, the paper examines the interest for microeco-nomics of the concept of bounded rationality. It starts from a simple model of the labour market on which agents scarch and adapt their demands, contributing unconsciously to the emergence of a unique price. More complex models are thereafter introduced, which enables to draw a picture of the variety of possible trajectories in a dynamic microeco-nomic system. This approach enables to enlarge microeconomics and to explain numerous facts poorly taken into account in the traditional presentations.

See on ideas.repec.org

26
Giu
12

Testing Bounded Rationality against Full Rationality in Job Changing Behavior

See on Scoop.itBounded Rationality and Beyond

In this paper we question the hypothesis of full rationality in the context of job changing behaviour, via simple econometric explorations on microdata drawn from WHIP (Worker Histories Italian Panel). Workers’ performance is compared at the end of a three-year time window that starts when choices are expressed, under the accepted notion that the main driving forces of job change are future real wages and expected job quality. Bounded rationality suggests that individuals will search for new options capable to attain “satisfactory” targets (aspirations levels, standards, norms), based on conditions prevailing in their own local environments. Our empirical strategy consists of appropriately defining such environments (cells) and observing the ex-post individual performance in relation to the degree of dispersion, clustering and mobility within and between cells. Under full rationality the following are to be expected: high inter-cell mobility, large dispersion around the targets, and clustering in the vicinity of the efficiency frontier. None of the above expectations are confirmed in this exploration. Our conclusion is that workers behave according to principles of rationality that seem distant from those of “full rationality” assumed in the vast majority of contemporary empirical (and theoretical) studies. The idea of “bounded rationality” à la Simon provides a better fit to our observations.

See on ideas.repec.org

26
Giu
12

Economics and psychology.Perfect rationality versus bounded rationality – Munich Personal RePEc Archive

See on Scoop.itBounded Rationality and Beyond

Classical mathematical algorithms often fail to identify in time when the international financial crises occur although, as the classical theory of choice would suggest, the economic agents are rational and the markets are or should be efficient and behave also rationally. This contribution does not pretend to give a complete answer to these questions, but it will highlight some well-known limits of the classical theory of rational choice and compare this theory of choice with the approach that seeks to combine economics and psychology and that has established itself as cognitive or behavioral economics. In particular, the present paper will focus on the juxtaposition of the concepts of perfect rationality and bounded rationality. It concludes with some references to the literature of behavioral finance which has given important contributions in explaining the behavior and the anomalies of financial markets.

See on mpra.ub.uni-muenchen.de




Time is real? I think not

giugno: 2012
L M M G V S D
« Mag   Lug »
 123
45678910
11121314151617
18192021222324
252627282930  

Commenti recenti

Lorenzo Bosio su Un testo che trascende le sue…

Inserisci il tuo indirizzo e-mail per iscriverti a questo blog e ricevere notifiche di nuovi messaggi per e-mail.

Segui assieme ad altri 1.159 follower

Latest Tweets

Annunci

%d blogger hanno fatto clic su Mi Piace per questo: