Investor Psychology and Asset Pricing

David Hirshleifer

MPRA Paper from University Library of Munich, Germany

Abstract: The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for understanding decision biases, evaluates the a priori arguments and the capital market evidence bearing on the importance of investor psychology for security prices, and reviews recent models.

Keywords: investor psychology; asset pricing; behavioral finance; behavioral economics; anomalies; misvaluation; risk; decision biases; emotions; decision bias; arbitrage; capital markets (search for similar items in EconPapers)
JEL-codes: G1 G11 G12 G14 (search for similar items in EconPapers)
Date: 2001-02-10
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Citations: View citations in EconPapers (922)

Published in Journal of Finance 4.56(2001): pp. 1533-1597

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Journal Article: Investor Psychology and Asset Pricing (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5300

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