Modern Finance vs. Behavioural Finance: An Overview of Key Concepts and Major Arguments

ArXiv ID: ssrn-1678414 “View on arXiv”

Authors: Unknown

Abstract

Modern Finance has dominated the area of financial economics for at least four decades. Based on a set of strong but highly unrealistic assumptions its advocate

Keywords: Modern Finance, Financial Economics, Economic Assumptions, Economic Models, Theoretical Critique, Academic/Financial Economics

Complexity vs Empirical Score

• Math Complexity: 2.0/10
• Empirical Rigor: 1.0/10
• Quadrant: Philosophers
• Why: The paper is a conceptual overview comparing theoretical frameworks, with no mathematical derivations or empirical backtesting. It focuses on arguments and assumptions rather than data or implementation.

  flowchart TD
    A["Research Goal<br>Compare Modern & Behavioral Finance"] --> B["Methodology<br>Literature Review & Theoretical Analysis"]
    B --> C["Data/Inputs<br>Key Assumptions & Major Arguments"]
    C --> D["Computational Process<br>Critique & Comparison of Frameworks"]
    D --> E["Key Findings<br>MF: Highly unrealistic assumptions<br>BF: Incorporates psychological factors"]