Inefficient Markets: An Introduction to Behavioral Finance / Edition 1

Paperback (Print)
Rent
Rent from BN.com
$12.56
(Save 72%)
Est. Return Date: 10/22/2014
Used and New from Other Sellers
Used and New from Other Sellers
from $5.15
Usually ships in 1-2 business days
(Save 88%)
Other sellers (Paperback)
  • All (33) from $5.15   
  • New (13) from $23.99   
  • Used (20) from $5.15   

Overview


The efficient markets hypothesis has been the central proposition in finance for nearly thirty years. It states that securities prices in financial markets must equal fundamental values, either because all investors are rational or because arbitrage eliminates pricing anomalies. This book describes an alternative approach to the study of financial markets: behavioral finance. This approach starts with an observation that the assumptions of investor rationality and perfect arbitrage are overwhelmingly contradicted by both psychological and institutional evidence. In actual financial markets, less than fully rational investors trade against arbitrageurs whose resources are limited by risk aversion, short horizons, and agency problems. The book presents models of such markets. These models explain the available financial data more accurately than the efficient markets hypothesis, and generate new predictions about security prices. By summarizing and expanding the research in behavioral finance, the book builds a new theoretical and empirical foundation for the economic analysis of real-world markets.
Read More Show Less

Editorial Reviews

From the Publisher

"An excellent academic discussion of [stock mispricing] and other behavioral influences in the stock market."--Jeff Madrick, New York Review of Books

"The only advanced undergraduate or graduate text available on the subject."--Jeffrey Wurgler, Yale School of Management

Read More Show Less

Product Details

  • ISBN-13: 9780198292272
  • Publisher: Oxford University Press
  • Publication date: 4/20/2000
  • Series: Clarendon Lectures in Economics Series
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 224
  • Sales rank: 973,767
  • Product dimensions: 8.40 (w) x 5.40 (h) x 0.60 (d)

Meet the Author

Andrei Shleifer is professor of Economics at Harvard University.

Read More Show Less

Table of Contents

Are Financial Markets Efficient?
Noise Trader Risk in Financial Markets
The Closed-End Fund Puzzle
Professional Arbitrage
A Model of Investor Sentiment
Positive Feedback Investment Strategies
Open Problems

Read More Show Less

Customer Reviews

Be the first to write a review
( 0 )
Rating Distribution

5 Star

(0)

4 Star

(0)

3 Star

(0)

2 Star

(0)

1 Star

(0)

Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation

Reminder:

  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

 
Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Anonymous

    Posted August 21, 2000

    An introduction to Schleifer's work

    In this book, Professor Schleifer has collected some of his older papers, and given this collection a fashionable title, by making references both to market inefficiency and behavioral finance. The truth is that these references don't make too much sense, since he neither gives an introduction to behavioral finance (the study of how people make decisions under financial uncertainty), nor does he provide the reader with convincing arguments on why markets are inefficient. In chapter 2, he introduces the noise trader hypothesis, based on an article he wrote in the Journal of Finace (JOF) in 1990. The problem with the noise trader hypothesis is that it is hardly a behavioral assumption; specifically it does not explain why people make a biased decision when faced with financial uncertainty. Moreover, the noise trader hypothesis is untestable. In the end, it is just an easy way of getting around some of the existing paradoxes in finance, by assuming that people are stupid - say noisy, in Schleifer's vocabulary. In chapter 4, he is concerned with the 'limits of arbitrage' (the original title of this paper, published in the JOF in 1997). This paper is definitely worth reading to understand the problems with hedge funds and other arbitrageurs. However, linking the limits of arbitrageurs to 'inefficiency of the market' is erroneous. The very fact that arbitrageurs can not take advantage of what they think are mispriced assets, due to collateral constraints (Schleifer's hypothesis), shows that the market is efficient, since no free money is floating around. The other chapters can be criticized in similar ways. E.g. chapter 3 on closed end funds has been criticized by his peers (Merton Miller, a.o.) in the JOF of 1993. Nevertheless, this book is worth reading, since most of the articles Schleifer has written have been influential, placed in their proper context. However, anybody who thinks that he's getting a good introduction to either inefficient market theory or behavioral finance, will feel deceived at the end of this book.

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)