From Efficient Market Theory to BehavioralFinance

ArXiv ID: ssrn-349660 “View on arXiv”

Authors: Unknown

Abstract

The efficient markets theory reached the height of its dominance in academic circles around the 1970s. Faith in this theory was eroded by a succession of discov

Keywords: efficient markets hypothesis, behavioral finance, market anomalies, asset pricing, financial bubbles, Equities

Complexity vs Empirical Score

  • Math Complexity: 6.5/10
  • Empirical Rigor: 4.0/10
  • Quadrant: Lab Rats
  • Why: The paper presents formal econometric models and variance tests (e.g., present value equations, vector autoregressions) indicating advanced math, but relies on historical data analysis and theoretical critique without detailed backtest specifications, datasets, or implementation code.
  flowchart TD
    A["Research Goal: <br/>Explain Market Anomalies"] --> B["Methodology: <br/>Comparative Analysis"]
    B --> C["Data: <br/>Equities & Historical Prices"]
    C --> D["Computational Process: <br/>Test EMH vs. Behavioral Models"]
    D --> E["Key Findings: <br/>Behavioral Factors Drive Bubbles"]
    D --> F["Key Findings: <br/>Markets are not Fully Efficient"]