Stochastic Processes in Finance and Behavioral Finance

Matjaz Steinbacher

MPRA Paper from University Library of Munich, Germany

Abstract: In the paper, we put some foundations for studying asset pricing and finance as a stochastic and behavioral process. In such process, preferences and psychology of agents represent the most important factor in the decision-making of people. Individuals have their own ways of acquiring the information they need, how to deal with them and how to make predictions and decisions. People usually also do not behave consistent in time, but learn. Therefore, in order to understand the behavior on the markets, a new paradigm is needed.

Keywords: behavioral finance; stochastic finance (search for similar items in EconPapers)
JEL-codes: D81 D83 G14 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/13647/1/MPRA_paper_13647.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13603

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