A BEHAVIORAL FINANCE PERSPECTIVE OF THE EFFICIENT MARKET HYPOTHESIS

Camelia Oprean-Stan

Annals of University of Craiova - Economic Sciences Series, 2012, vol. 3, issue 40, 159-164

Abstract: Nowadays, a central theme in the finance and economic theory is market efficiency. After several decades of research, economists have not yet reached a consensus about the existence of efficient financial markets in terms of information. In the problematized approaches regarding the treated subject, one can find the inquiries on the validity of assumptions underlying the informational efficiency theory of the financial market. The emerging discipline of behavioral economics and finance has challenged the EMH hypothesis, arguing that markets are not rational, but are driven by fear and greed instead. The paper proposes a critical analysis, based on consistency criteria, regarding the controversed current state of the informational efficiency theory of the capital market. In this sense, the critical approach is one that shows the weaknesses, the vulnerable aspects that characterize the classical form of EMH theory. Also, the paper highlights the most signicant criticisms levelled against EMH by psychologists and behavioral economists.

Keywords: efficient market hypothesis; informations; behavioral finance; random walk (search for similar items in EconPapers)
JEL-codes: G02 G14 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:aio:aucsse:v:3:y:2012:i:40:p:159-164

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