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Social and Behavioral Sciences Commons™
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Full-Text Articles in Social and Behavioral Sciences
Behavioral Economics And The Effects Of Psychology On The Stock Market, Justin L. Nagy
Behavioral Economics And The Effects Of Psychology On The Stock Market, Justin L. Nagy
Applied Economics Theses
The purpose of this thesis is to study the contributions behavioral economics and finance have had on the understanding on how the stock market works. The idea that psychology plays a role in influencing the stock market can be dated back to Adam Smith who wrote about individual’s behavior in his work Theory of Moral Sentiments. It wasn’t until the latter half of the 20th century that behavioral economics became accepted as a counter to Eugene Fama’s widely accepted theory of Efficient Market Hypothesis. This paper will analyze the development of behavioral economics, review the main contributors to the field …
Rationality Vs Reality: The Dissonance Between Economic Models And Experimental Data, Piotr Broda
Rationality Vs Reality: The Dissonance Between Economic Models And Experimental Data, Piotr Broda
College Honors Program
Rationality was not embedded in economic theory from its onset. In fact, the discipline started with a more holistic approach to human nature, incorporating notions of empathy and altruism. It was not until economics progressed and became more concerned with mathematical models and abstract theories that rationality entered the fray. Game theory, developed in the 1940s, established several axioms about human behavior that presented people as perfectly rational economic agents. It was not until behavioral researchers started investigating the question of rationality that the economic worldview was critically challenged. This research was the driving force in the development of behavioral …