Puzzles in finance

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Chapter 4 in Controversies in Economics and Finance, 2020, pp 73-98 from Edward Elgar Publishing

Abstract: Finance puzzles arise because of firm (perhaps dogmatic) belief in theories and models depicting how financial markets should behave or how things should be. They also arise because a set of empirical results that someone stumbles on becomes a finding that is as powerful as a law of physics. This is the field where the majority of economists think that the market efficiency hypothesis is the law of the land, even though casual empiricism tells us otherwise. It is also the field where the so-called ‘asset pricing models’, such as the full menu of the Fama_French models, are perceived to provide exact figures on what the return on a particular asset should be.

Keywords: Economics and Finance; Research Methods; Teaching Methods (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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