Human Behavior and the Efficiency of the Financial System

Robert Shiller

No 6375, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent literature in empirical finance is surveyed in its relation to underlying behavioral principles, principles which come primarily from psychology, sociology and anthropology. The behavioral principles discussed are: prospect theory, regret and cognitive dissonance mental compartments, overconfidence, over- and underreaction, representativeness heuristic disjunction effect, gambling behavior and speculation, perceived irrelevance of history thinking, quasi-magical thinking, attention anomalies, the availability heuristic contagion, and global culture.

Date: 1998-01
Note: AP
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Published as Shiller, Robert J., 1999. "Human behavior and the efficiency of the financial system," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 20, pages 1305-1340 Elsevier.

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Chapter: Human behavior and the efficiency of the financial system (1999)
Working Paper: Human Behavior and the Efficiency of the Financial System (1998)
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