Quantitative Behavioral Finance

Quantitative behavioral finance is a new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001–2004) and collaborators including Vernon L. Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds.

The research can be grouped into the following areas:

  1. Empirical studies that demonstrate significant deviations from classical theories.
  2. Modeling using the concepts of behavioral effects together with the non-classical assumption of the finiteness of assets.
  3. Forecasting based on these methods.
  4. Studies of experimental asset markets and use of models to forecast experiments.

Read more about Quantitative Behavioral Finance:  History

Famous quotes containing the word finance:

    There is an enormous chasm between the relatively rich and powerful people who make decisions in government, business, and finance and our poorer neighbors who must depend on these decisions to alleviate the problems caused by their lack of power and influence.
    Jimmy Carter (James Earl Carter, Jr.)