Abstract
The neoclassical financial theory made various strong assumptions including decision makers’ rationality, common risk aversion, perfect markets with no frictions such as transaction costs or taxes, and easy access to information for all market participants. Although many of the assumptions of the neoclassical theory were unrealistic, financial economists initially accepted it because its predictions seemed to fit reality. It was not until much later that contradictive evidence started to pile up and behavioral finance emerged in response.
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© 2013 Adam Szyszka
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Szyszka, A. (2013). Introduction. In: Behavioral Finance and Capital Markets. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137366290_1
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DOI: https://doi.org/10.1057/9781137366290_1
Publisher Name: Palgrave Macmillan, New York
Print ISBN: 978-1-349-46414-2
Online ISBN: 978-1-137-36629-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)